Buying a Home With Solar? What Buyers Need to Know Before Taking Over the SystemSolar panels can be a major selling point when you're shopping for a home in California.Lower electric bills? Renewable energy? Potential protection against rising utility costs?Sounds great.But when I see solar panels on a property, my first question isn't simply:“Does the home have solar?”It's:“Who owns the solar, and what exactly is the buyer taking over?”Because solar panels on the roof don't automatically mean free electricity, and depending on how the system was financed, buying that home could mean taking on an additional financial obligation.

First Question: Is the Solar Owned or Leased?

This is one of the most important things to determine when purchasing a home with solar.

Owned Solar

If the solar system is owned outright, the situation is generally much simpler.The seller owns the equipment rather than making payments to a solar company. Depending on the system, the buyer may receive the benefit of the existing solar installation without taking over a separate monthly solar payment.But we still want to understand the system itself.How old is it?How much electricity does it produce?Is there a battery?Are there warranties?Has the system had any maintenance issues?What utility billing program is it currently under?Solar isn't something I want my buyers to simply see on a listing and assume is an automatic benefit.We need to investigate the details.

Leased or Financed Solar Is Different

If the solar isn't owned outright, we need to understand the agreement attached to it.The seller may have a solar lease, power purchase agreement, or financing obligation that needs to be addressed as part of the sale.Depending on the contract, the buyer may be asked to assume an existing agreement or the seller may need to satisfy it.This matters because you may be taking over someone else's financial obligation in addition to purchasing the house.If there's a monthly solar payment, that needs to be part of your affordability calculation.For example, if you've determined that a particular mortgage payment is comfortable for your household but the property also comes with a $200 monthly solar obligation, I don't want you discovering that after you've already fallen in love with the house.We need to understand the complete housing expense.The specific solar agreement should also be reviewed carefully because transfer requirements vary by provider and contract.

Ask for the Solar Documents

If I'm helping a buyer evaluate a home with solar, I want to know more than whether the listing says “SOLAR!”Ideally, we want documentation that helps answer questions such as:

Is the system owned, leased, financed, or subject to a power purchase agreement?
Is there an outstanding balance?
What are the monthly payments?
Do the payments increase over time?
What are the transfer requirements?
How old is the system?
Is there a battery?
What warranties remain?
What has the home's actual electricity usage and billing looked like?

The answers can materially change how attractive that solar system actually is.

Solar Doesn't Necessarily Eliminate Your PG&E Bill

This is another misconception I see.Having solar doesn't necessarily mean you'll never pay PG&E for electricity again.Your panels generate electricity when conditions allow, but your household may need electricity at times when your system isn't producing enough.The obvious example is at night.If the home doesn't have battery storage, the solar panels aren't producing electricity after the sun goes down. When the home needs more electricity than the system is supplying, that electricity comes from the grid.PG&E confirms that when a solar property's needs exceed what its system is producing, PG&E supplies the additional electricity. Under its current Solar Billing Plan, customers receive credits for eligible electricity exported to the grid and are charged for electricity drawn from the grid.That's one reason I also want to know:Does the home have a battery?A battery can store some of the electricity generated by the solar system so it can be used later when the panels aren't producing, rather than immediately exporting all excess production to the grid.

And Then There's the True-Up Bill

If you're buying a California home with solar, you may hear the term “True-Up.”This is something buyers should understand rather than assuming the seller's low monthly PG&E payment tells the entire story.For PG&E customers on traditional Net Energy Metering, or NEM, monthly energy charges and solar credits accumulate during a 12-month billing cycle. At the end of that cycle, PG&E issues a True-Up statement reconciling those charges and credits. If there's a remaining balance, that's when it becomes due.So a seller telling you, “My PG&E bill is only $25 a month,” doesn't necessarily tell you their total annual electricity cost.I would also want to see what their True-Up has historically looked like.Maybe it's minimal.Maybe it's hundreds of dollars.Maybe it's significantly more because the household consumes considerably more electricity than the solar system offsets.That information gives us a much better picture.

Not Every Solar Home Is Billed the Same Way

This has become especially important in California because solar billing rules have changed.Some existing systems remain under older NEM arrangements, while newer qualifying PG&E systems are generally subject to the newer Solar Billing Plan, also known as the Net Billing Tariff.Under the newer structure, the value of electricity sent to the grid and the cost of electricity taken from the grid depend more heavily on when that energy is produced and consumed. PG&E specifically notes that battery storage can allow homeowners to use stored solar power when the system isn't generating electricity.So when buying a home with solar, I wouldn't assume one homeowner's experience will be the same as another's.We want to determine which utility billing program applies to that particular system.

Look at the Seller's Actual Energy History

One of the most useful pieces of information can simply be the seller's historical utility bills.I want to know:What are they paying PG&E?What has their True-Up looked like, if applicable?How much electricity is the system generating?How much is the household consuming?Is there a separate solar payment?Does the home have battery storage?Keep in mind that your usage may be completely different from the seller's.A retired couple living in a home may consume dramatically less electricity than a family with children, two electric vehicles, and someone working from home.Historical bills aren't a guarantee of what you will pay.They're information we can use to better understand the property.

Solar Should Be Part of Your Affordability Analysis

This is the bigger lesson.When you're purchasing a home, affordability isn't just:Purchase price + mortgage payment.I want to understand the entire picture:Mortgage payment.Property taxes.Homeowners insurance.HOA dues.Utilities.And, if applicable, solar payments.A home with a well-performing, owned solar system may be very attractive.A home with a solar agreement requiring a substantial monthly payment may need to be evaluated differently.Neither situation should automatically make you buy or walk away.You simply need to know what you're agreeing to.

The Bottom Line

Solar can absolutely be an asset when purchasing a California home.But don't let the panels themselves be the end of your due diligence.Before purchasing a home with solar, find out:Who owns the system?Is there an outstanding financial obligation?Would you be assuming a lease, loan, or other agreement?What would that payment do to your monthly housing costs?Does the system include battery storage?Which PG&E solar billing program applies?What have the property's actual utility bills and True-Up amounts looked like?Because when you buy a home with solar, you're not just evaluating the house.You're evaluating the solar system and any financial obligations that come with it, too.Evangeline Nguyen, REALTOR®eXp Realty | DRE #02210833Bay Area & Northern California

Evangeline Nguyen REALTOR® Area served: Hercules, Contra Costa County, CA, Fairfield, Solano County, CA, San Francisco, CA, San Jose, Santa Clara County, CA, Richmond, CA, Contra Costa County, CA, Alameda County, CA, Santa Clara County, CA, Sacramento County, CA, San Mateo County, CA, Solano County, CA Expertise: First-Time Buyer, Military PCS, VA Financing