Solar panels on roof of house.

Solar installations can lower utility bills and help to combat climate change. (Getty Images)

As Americans gain awareness about the financial and environmental cost of non-renewable energy sources, residential solar installations are increasing across the country. The Solar Energy Industries Association reports that the U.S. now has enough solar installations to power 5.7 million homes, with more than 1 million individual solar installations across the country. While solar installations were once common in high-end homes, the decreasing cost of these systems means they're showing up on moderately priced homes, too.

As homeowners with solar panels sell those homes, it presents an opportunity for new homeowners to reap the benefits of lower electric bills and a smaller environmental footprint. Still, new owners won't qualify for the solar rebates and tax credits that the original installer could get. "The single most effective thing that any one individual can do [to combat climate change] is to go solar," says Raina Russo, founder of Women4Solar, and advisor for CREW: Own the Switch Advisor for Integrity & Mission Council Team Builder. "A homeowner that buys a solar powered house should feel very proud," she adds.

[See: 7 Homebuying Mistakes to Avoid.]

Of course, the decision to install solar panels goes beyond the potential energy savings and environmental impact. The original owners have the opportunity to thoroughly research their purchase, choose between different manufacturers and installers and make other choices. Meanwhile, homebuyers searching for a residence with existing solar panels can avoid this legwork, but they should still do their homework since the purchase has more complexities than a conventional home purchase. Solar is essentially a "25-year marriage," Russo says.

In general, buyers are willing to pay more for a home with solar features since they know they'll be rewarded with low (or no) electric bills. A 2015 Berkeley Laboratory study found that buyers are willing to pay an average of $4 per watt of solar photovoltaic energy system installed, which equates to about $15,000 for the average system.

However, home appraisers don't always factor solar panels into their assessment of the home's value, especially if there aren't other comparable homes in the area that have solar. "The awareness about the value of solar varies widely across the country," says John Livermore, executive director of the nonprofit Healthy Home Healthy Planet. When the sellers price a home based on the value of solar features but the appraiser doesn't, that can create a gap between what the buyer offers to pay and the amount the mortgage lender is willing to loan on the home. "That's a conversation that the agent should be having with the appraiser," says Shane Herbert, a real estate agent at Summit Sotheby's International Realty in Park City, Utah.

With that in mind, here are some questions to consider before buying a home with existing solar panels.

Are the panels leased or owned? Ideally, you'd buy a home from someone who owns the solar panels affixed to the home rather than assuming their solar lease. Because solar leases are an ongoing liability (often with escalating payments), assuming a lease can raise your debt-to-income ratio and hinder your ability to qualify for a mortgage on the home. Leasing solar may also give you fewer certainties than owning them, adds Christina Mathieson, vice president of marketing at the New York-based SUNation Solar Systems and a LEED Green Associate. "What we're seeing is that many leasing companies retain the right to change their production guarantee," she says. "They retain the right to every year or two lower the amount that they say their system is going to produce," she adds. Plus, there's no guarantee that the leasing company will approve you as the new lessee either.

[See: 12 Ways to Save More in the Springtime.]

Who is the manufacturer? Even if you haven't chosen the solar manufacturer, you should still research its reputation. In the best-case scenario, the solar system is from a U.S. company, according to Mathieson. "That doesn't necessarily mean that the panels are exclusively manufactured here, but you want them to be a U.S. corporation so you're protected by the Magnuson–Moss Warranty Act [a law that protects U.S. consumers from shady warranty practices]," she says.

Who installed the panels? Mathieson suggests researching the reputation of the person who originally installed the solar system. "The roof is one of the most important structures of your home," she explains. "Check out the installer that put the system in and make sure that that installer has a warranty," she suggests, pointing out that the installer or the company that sold the system may be willing to inspect it for you to provide peace of mind. Herbert also suggests getting an independent professional to inspect the system before you commit to buying a new home with existing panels.

Can I see past electric bills? Ask to see the current owner's utility bills from the past year, so you'll know what to expect. Most parts of the U.S. operate under net metering where your electricity bill can be zeroed out by solar, but not reduced further. Still, you could roll over credits from a sunny month into a less sunny month, according to Livermore. In a few areas, you can actually get paid for excess electricity your solar panels generate as allowed by your state and your utility provider. Not all solar systems are created equal. "The age of the solar does make a drastic difference, also how many panels and how much energy usage the house is seeing," Herbert adds.

[See: 12 Home Improvement Shortcuts That Are a Bad Idea.]

What's the warranty? Ask about the warranty terms. You likely have two separate warranties: one for the panels and another for the inverter, which converts the energy produced by your panels into alternating current that actually powers your house. "Usually the warranty for the inverter is shorter and the expected life is shorter," Livermore says. "Sometimes when a solar system is sold, the buyer will purchase an option for the replacement of the inverter. Sometimes they don't," he adds. The typical solar panel warranty might run 25 to 30 years, while inverters might be warrantied for 10 years, according to Livermore. "They need that documentation to be passed on to them [in case] there were any issues down the road," Russo adds.

Tags: personal finance, money, environment, solar energy, savings, new home sales


Susan Johnston Taylor has contributed to the money section of USNews.com since 2011, covering everything from personal finance apps and spending strategies to mortgages, insurance and estate planning. Her articles on business and personal finance have also appeared in or on The Atlantic, The Boston Globe, Learnvest, Entrepreneur and Fast Company. Susan's goal is to offer readers new insights and practical ways to save money, advance their careers or improve their lives. You can find her on Twitter @UrbanMuseWriter.

Recommended Articles

Should You Move to Florida?

Devon Thorsby | May 21, 2020

Whether you're aiming for South Beach or the Panhandle, there are a few things you should know before making Florida your new home.

6 Things a Virtual Tour Doesn't Show You

Wendy Arriz | May 20, 2020

Before you buy a home based on a virtual tour, think about the details you still don't know.

How to Buy a House

Devon Thorsby | May 19, 2020

Follow these steps to get you through the process of buying a home.

How Much Will Your Home Remodel Cost?

Devon Thorsby | May 14, 2020

Before you tackle too many projects, figure out what home improvements your budget can accommodate.

What It's Like to Buy a House Right Now

Frank Nieto | May 14, 2020

Social distancing and quarantines changed, but didn't cancel, the homebuying and selling process for one homeowner.

A Checklist for Moving to Your New Home

Devon Thorsby | May 12, 2020

Make moving day less hectic by packing, planning and organizing six weeks before you relocate.

Home Office Setup Ideas

Steven Gottlieb | May 12, 2020

If you find yourself working from home regularly, there are a few things that you can do to make your home more WFH-friendly.

U.S. News Best Places Rankings

May 11, 2020

U.S. News analyzed the 150 most populous metro areas to rank places to live by category.

How to Save Energy and Cut Utility Bills

Devon Thorsby | May 7, 2020

These changes will make your home energy-efficient and cut your utility spending.

Options If Your Tenant Doesn't Pay Rent

Devon Thorsby | May 5, 2020

Communication with your tenant can help you determine the best course of action if you're not receiving rent on time.

House Painting Rules You Shouldn't Break

Don Vandervort | May 1, 2020

Whether you DIY or hire a pro, make sure each step of the process is done right.

How Past Pandemics Impacted Housing

Dima Williams | April 30, 2020

Past outbreaks such as the swine flu and SARS hold lessons for how the COVID-19 pandemic will affect homebuying and selling.

Why Move to Lower Your Property Taxes?

Steven Gottlieb | April 29, 2020

A rising property tax bill may have you thinking about a move – but consider these three things first.

Should You Sell Your Home in 2020?

Devon Thorsby | April 28, 2020

You may be wondering if now is a good time to sell your house, and the answer is: maybe.

8 New House Hunting Priorities

Lisa Larson | April 28, 2020

Homebuyers who enter the market after the risk of COVID-19 has diminished will have a whole new set of priorities for their home search.

What to Know About a Pending Home Sale

Devon Thorsby | April 23, 2020

Here's what buyers, sellers and interested parties should do while a real estate deal is pending.

How to Make a Contingent Offer on a Home

Devon Thorsby | April 21, 2020

Whether you're concerned about the COVID-19 pandemic or what an inspection will reveal, here's how a contingency clause can protect you in a real estate deal.

How to Move During the Pandemic

Devon Thorsby | April 16, 2020

Follow these steps to make your move safer during the COVID-19 pandemic.

How Much Do Septic Tanks Cost?

Devon Thorsby | April 14, 2020

Expect to pay at least a few thousand dollars to replace or install a septic tank or entire septic system.

Tips for Living in a Small Apartment

Devon Thorsby | April 9, 2020

Here's how to make the best of a small apartment while staying at home.