Selling a Home with Solar Panels in Westside Los Angeles: What You Need to Know

Solar panels are common on the Westside. The question is not whether buyers care about them. They do. The question is what you need to know before your home goes to market, because how the panels were financed changes almost everything about how the transaction works.

If you bought your solar system outright, or paid it off with a loan that is now settled, you own the panels. They transfer with the home as part of the real property. Buyers generally see owned panels as an asset: they inherit the electricity production, they are not locked into a payment agreement, and if the system is operating well, there is a real utility cost benefit to show them.

If your panels are leased, the situation is different. A solar lease is a contract with a third party, often running 20 to 25 years from the original installation date. The lease does not go away when you sell. You have two options at closing: transfer the lease to the buyer, who must qualify with the solar company, or buy out the lease before or at closing. Some buyers are willing to assume a lease, especially if the monthly payment is low and the electricity savings offset it. Others are not. This is worth knowing before you go to market.

Some solar systems are financed through a Property Assessed Clean Energy program, known as PACE. PACE assessments are tied to the property and recorded as a lien, which means they transfer to the buyer through the property tax bill. California law requires disclosure of PACE liens, and some buyers and their lenders are not comfortable with them. Better to surface this before the listing goes live than to discover it in escrow.

California requires sellers to disclose material facts. Solar panel financing arrangements, PACE liens, and any lease or power purchase agreement on the home are material facts. If you have a loan with a balance, that balance and the lien position need to be disclosed. The full framework for what California sellers must disclose is in what California sellers are required to disclose. The general rule: if it affects the property's title, liens, costs, or usability, it belongs in the disclosure. When in doubt, disclose.

Owned panels can add to appraised value, but the method appraisers use varies. Some appraisers are trained to use an income approach based on projected energy savings, while others rely on comparable sales data. If there are not many recent comparable sales in your area with similar solar systems, the appraiser may not give you the full credit a buyer might expect. I flag this early with sellers who have owned systems, because setting accurate expectations on appraised value before you price the home is better than a low appraisal after you are already in contract.

Buyers looking at a solar-equipped home usually ask some version of these:

• Are the panels owned or leased, and is there any agreement I would be taking on?
• What is the typical monthly electricity production and the utility bill?
• How old is the system, and are there any remaining warranties?
• Has the system had any maintenance issues or repairs?
• Is the utility interconnection agreement current and in good standing?

If you can answer these with documentation, you remove friction from the deal. If you do not have the paperwork, contact your solar company before you list and get it together. That is one of the items I help coordinate as part of the Concierge Standard before your home goes live.

Before listing, I recommend sellers with solar gather: the original lease, PPA, or purchase agreement; the payoff or balance statement if there is a loan; the utility interconnection approval; any warranties still in effect; and the most recent 12 months of utility bills to show what the system has actually produced. This takes a phone call or two to your solar company and a pull of your utility records. It removes one of the most common surprises in a transaction involving a solar home.

Solar can add value to your home, and it adds a layer of paperwork to your sale. Neither has to be a problem if you know what you are dealing with before you list. I handle the upfront coordination so you are not surprised in escrow. For the full picture of what selling on the Westside looks like, read how to sell your home in Westside Los Angeles. If you want to talk through how your panels will affect your sale, book a consultation and we will walk it together. No pressure, just real answers.

Online estimates do not walk your house. I do. If you would like a real read on what your home in Playa del Rey is worth right now, get in touch and I will put one together for you at First Key Pacific.