Navigating purchasing an exisiting home with a solar loan

[GON]

On a flight to look at a single-family home that is for sale.

The listing broker "mentioned" the home has a solar panel loan and/ or lease, and it is something I need to "assume" with the purchase of the house. The broker was supposed to send me the details on the solar panel loan/ lease, but never received.

Anyone with knowledge on the risks/ rewards of purchasing a single family home and as part of the transaction the solar panel loan/ lease must be assumed by the buyer?

Update- broker just sent the details on the solar:
Loan Balance: $47,126
Loan Payment: $212/Month
Interest Rate: 1.99%

 

[wwillson]

The contract I read, when solar was proposed for our IL home, was one sided for the solar company. If you sold the home and the new owner didn't want to assume the contract, then you had to buy the contract out when you sold the home. Basically you have to find a buyer willing to assume the contract. When I read that language in the contract, I threw it in the round file. No thank you. We sold our house about a year later. Always read every word of a contract, if you don't, you have nobody to blame but yourself.

 

[dishdude]

Someone sure got taken to the cleaners!

That house is now worth $47,126 less.

 

[ctechbob]

How many KW is the system and is there battery storage in the house?

 

[GON]

How many KW is the system and is there battery storage in the house?

No idea, I have some research to do......

 

[BHopkins]

So, assuming you only paid the $212/mo., about 23 years remaining on solar panels that probably only have a 25 year life? Any idea how long ago the system was installed? Can you negotiate the solar loan? Ask the seller to make a lump payment of $27k, and you assume the $20k balance.

 

[GON]

So, assuming you only paid the $212/mo., about 23 years remaining on solar panels that probably only have a 25 year life? Any idea how long ago the system was installed? Can you negotiate the solar loan? Ask the seller to make a lump payment of $27k, and you assume the $20k balance.

I have no additional information other than what I posted. The home was built in 2019, so that may help provide some insight into the age of the solar panels.

I had zero idea the costs and other issues with solar panels. I may have passed flying out to see this home if I knew of the $47k USD solar panel loan earlier- or the baggage solar panels may bring to the sale of a home. I just took a second look at the listing, zero talk of the solar panels in the MLS listing.

My gut is if by chance the home is a match, I will offer full list price, but the Seller has to pay off the solar panels.

 

[BHopkins]

Someone sure got taken to the cleaners!

That house is now worth $47,126 less.

This raises a very good point.

Is the selling price of the home based upon the value of the home with or without the solar system. If with, then by assuming the loan for the solar panels, you are paying for them twice. If you are going to assume the solar system debt, then the value of the home needs to be for the home without solar.

 

[BHopkins]

I have no additional information other than what I posted. The home was built in 2019, so that may help provide some insight into the age of the solar panels.

I had zero idea the costs and other issues with solar panels. I may have passed flying out to see this home if I knew of the $47k USD solar panel loan earlier- or the baggage solar panels may bring to the sale of a home. I just took a second look at the listing, zero talk of the solar panels in the MLS listing.

My gut is if by chance the home is a match, I will offer full list price, but the Seller has to pay off the solar panels.

I believe many solar installers warrantee the % output over the lifespan of the panels. You may want to ask if this is the case, and if that warrantee is transferable to you, if you assume the loan.

I'm pretty skeptical of the payback on solar systems. You need @OVERKILL to chime in here. He is much more informed on the payback over lifetime vs investment on residential solar systems.

 

[RhondaHonda]

You are basically assuming a second mortgage (or first if you pay cash for the house). I wouldn’t put any stock in the warranty as the company will likely be out of business before you ever needed to make a warranty claim.

If you like the house and it’s priced right outside of the solar, then offer $47k less than the listing. The realtor is going to want the commission on the $47k so they’d rather have full list and then you work out the solar with the seller.

 

[PandaBear]

To me, solar loan / lien is likely not going to be worth the book value of whatever the loan is worth. This is like most remodeling will not increase the home price 100%, or a car with a loan will be up side down right off the bat.

At best, you can look at the historical output of the panel and see how much is the amount of kwh is worth, and offer an increase in value of the house, but this will likely be less than the discount you need to offer the house by the amount of the remaining loan balance.

A friend of mine bought a home with this kind of panel lien, he bid what is a fair value without the lien and subtract the lien amount. He was right as the output of the panels sucks; they installed it facing north and there is hardly any output.

 

[OVERKILL]

Unless you have a sweet 20-year feed-in tariff that gives you considerably more in revenue than the $212/month the system is costing you, it's potentially a pretty big headache to be assuming.

Collect as many details as you can.

 

[Nick1994]

Sounds like a great deal as long as the home is the size of a Costco.

Under 146,000 square feet? Nah.

 

[alarmguy]

Your only responsible for the price of the home unless told otherwise and if so would be in the contract at contract signing.
There is no reason to think you are assuming anything but of course ask so you don’t waste your time.
If not loan gets paid off at closing from the seller proceeds.

 

[dishdude]

Your only responsible for the price of the home unless told otherwise at contract signing. If not loan gets paid off at closing from the seller proceeds

What about any liens?

 

[alarmguy]

What about any liens?

Liens get taken out of sellers proceeds. Title to the home can’t pass to new owner without liens being cleared.

Some examples of liens are home mortgages, home equity loans/lines of credit, judgements from lawsuits and martial settlements, any debt that is attached to the title of the home has to be paid before the home is sold. This is what the title company does.
A home can not be sold unless one of the debt holders agrees to let the new owner take over the debt.

Typically when a home goes up for sale any conditions are told upfront or everyone is just wasting their time. The seller in this case would have to make it known and if not the OP needs to ask otherwise the purchase price is being falsely advertised if debt is intended to be attached to the home

 

[demarpaint]

The contract I read, when solar was proposed for our IL home, was one sided for the solar company. If you sold the home and the new owner didn't want to assume the contract, then you had to buy the contract out when you sold the home. Basically you have to find a buyer willing to assume the contract. When I read that language in the contract, I threw it in the round file. No thank you. We sold our house about a year later. Always read every word of a contract, if you don't, you have nobody to blame but yourself.

I've seen those contracts, a big no thanks for me as well. When we were house hunting they wanted us to take over a solar panel lease. IMO they were making someone else's problem mine. Now if I see solar panels on a roof I won't look at the house, one less clause to worry about in a contract.

 

[demarpaint]

I believe many solar installers warrantee the % output over the lifespan of the panels. You may want to ask if this is the case, and if that warrantee is transferable to you, if you assume the loan.

Around here several solar panel installers go in and out of business in such a short period of time it is hard to keep count of them. My bet is most of their warranties are worthless, or will be in short order. Just another thing to consider when thinking about installing solar panels or buying a house with them already installed.

 

[joekingcorvette]

I would never do a loan assumption. Make the seller payoff the solar panels then negotiate the loan on the home only with panels included. Beware of a lot of hidden fees in the loan and you don't really even know if they work properly. Buyer beware. IMO solar panels and swimming pools as well as hot tubs are extras that most people are not willing to pay more money for unless you live in Arizona or somewhere where it is very hot in the summer.

 

[BMWTurboDzl]

On a flight to look at a single-family home that is for sale.

The listing broker "mentioned" the home has a solar panel loan and/ or lease, and it is something I need to "assume" with the purchase of the house. The broker was supposed to send me the details on the solar panel loan/ lease, but never received.

Anyone with knowledge on the risks/ rewards of purchasing a single family home and as part of the transaction the solar panel loan/ lease must be assumed by the buyer?

Update- broker just sent the details on the solar:
Loan Balance: $47,126
Loan Payment: $212/Month
Interest Rate: 1.99%

Obtain the power bill from the property so you can determine how much power the panels generate to offset the monthly payment.
Solar systems are secured via UCC lien so if you opted to stop paying for them the creditor only has a claim against the system not the house..