Does solar increase home value?

The decision to install a residential solar energy system represents a significant capital investment, one that extends beyond immediate energy savings to profoundly impact a home's future marketability and resale value. The financial outcome of selling a solar-equipped home is overwhelmingly determined by strategic choices made before a single panel is installed. This report provides an authoritative framework for U.S. homeowners to navigate these critical decisions, ensuring their solar investment becomes a powerful asset rather than a transactional liability.

The central thesis of this analysis is that the method of financing—specifically, whether a system is owned or leased—creates a fundamental divide with far-reaching consequences for property value, appraisals, and the ease of a future sale. The evidence is unequivocal: owned systems, whether purchased with cash or via a loan, are treated as a property upgrade that can add a demonstrable market premium, with recent studies indicating an average increase in home value of 4% to 7%.[1, 2] Conversely, third-party owned (TPO) systems, such as leases and Power Purchase Agreements (PPAs), are not considered part of the real property, do not contribute to the appraised value under prevailing lender guidelines, and introduce significant transactional friction that can deter buyers and complicate closing.[3, 4, 5]

This report is structured in two parts. Part I: The Pre-Installation Playbook is a strategic guide to structuring a solar investment for maximum resale benefit. It provides a deep analysis of financing models, quantifies the impact on property value and appraisals, and examines how system design choices influence market perception. Part II: The Seller's Guide transitions to post-installation tactics, offering a comprehensive, step-by-step process for preparing, marketing, and successfully closing the sale of a solar-powered home.

Actionable checklists are provided in the appendices to serve as practical tools for homeowners, translating the report's detailed analysis into a clear, manageable decision-making process. By understanding and implementing the strategies outlined herein, homeowners can confidently invest in solar energy, secure in the knowledge that they are not only reducing their energy costs but also enhancing the long-term value and appeal of their most significant asset.

The Pre-Installation Playbook: Structuring Your Solar Investment for a Profitable Sale

The most consequential errors in a solar home sale are made years before a "For Sale" sign ever touches the lawn. This section is designed to front-load the critical decisions, framing solar not merely as an energy-saving appliance but as a major capital improvement. Like any significant home renovation, its ultimate financial return is dictated by the initial strategy. The following chapters provide a data-driven playbook for structuring a solar investment to ensure it is recognized, valued, and seamlessly transferred in a future real estate transaction.

The Ownership Imperative: Why Your Financing Choice is the Most Critical Decision

The method chosen to finance a solar energy system is the single most important decision a homeowner will make regarding its impact on a future home sale. This choice is not simply a matter of payment preference; it is a strategic decision that establishes the legal and financial nature of the system, determining whether it is an asset that adds value or a service contract that encumbers the property. Understanding this distinction is paramount.

Introduction: Owned vs. Third-Party Owned (TPO) - The Great Divide

The residential solar market is fundamentally bifurcated into two models: systems that the homeowner owns and systems owned by a third party.

• Owned Systems: The homeowner holds legal title to the solar equipment. This is achieved through an outright cash purchase or by financing the purchase with a solar loan. In the eyes of the real estate market, an owned system is a permanent fixture and a capital improvement to the property, akin to a renovated kitchen or a new roof.[6, 7] This ownership structure is the key that unlocks the system's potential to add to the home's appraised value and sale price.[4, 8]

• Third-Party Owned (TPO) Systems: A solar company retains ownership of the equipment installed on the homeowner's roof. The homeowner enters into a long-term contract (typically 20-25 years) to either rent the equipment (a solar lease) or purchase the power it generates (a Power Purchase Agreement, or PPA).[3, 8] This arrangement does not transfer an asset to the homeowner; it establishes a long-term financial obligation. For the purposes of a home sale, a TPO system is not part of the real estate. It is a service contract that must be dealt with, creating potential complications for buyers, lenders, and appraisers.[3, 4]

The consequences of this divide permeate every aspect of a future real estate transaction, from appraisal and buyer qualification to the complexity of the closing process itself.

Detailed Analysis of the Four Financing Models

1. Cash Purchase: The Gold Standard for Resale

• Mechanism: The homeowner pays the full cost of the solar system upfront.
• Real Estate Impact: This is the most straightforward and financially advantageous path for a future sale. With a cash purchase, the solar system is an unencumbered asset, fully owned by the homeowner.[8] This clear ownership eliminates any third-party involvement or contractual complications during the sale, allowing the system's value to be cleanly incorporated into the home's appraisal and sale price.[4, 5, 8] The homeowner is also directly eligible for all available federal, state, and local tax credits and rebates, which significantly reduces the net cost of the investment and accelerates the return on investment (ROI).[8, 9] From a transactional perspective, it is the simplest scenario: the solar system is just another feature of the home being sold.

2. Solar Loan: The Path to Ownership and Value

• Mechanism: The homeowner obtains a loan to finance the purchase of the system. Crucially, the homeowner is the legal owner of the equipment from the day of installation.[8]
• Critical Distinction: Secured vs. Unsecured Loans: The type of loan has significant implications at the time of sale.
  • Secured Loans: These loans use the property itself as collateral. Common examples include a Home Equity Line of Credit (HELOC), a home equity loan, or certain government-backed loans like the FHA 203(k) loan.[9, 10] Property Assessed Clean Energy (PACE) loans also fall into this category, creating a tax lien on the property that takes priority over other liens, which can be particularly problematic for lenders.[11] A secured solar loan must be paid off at or before the closing of a home sale, with the funds typically being deducted from the seller's proceeds.[8, 10] This payoff amount must be factored into the seller's net sheet to accurately calculate their profit.[12]
  • Unsecured Loans: These are often personal loans that are not tied to the property as collateral.[9] The primary advantage is that the home can be sold without the loan being paid off. However, this creates a significant financial risk for the seller, who remains personally responsible for making payments on a loan for an asset they no longer possess or benefit from.[8, 10, 13]
• The Illusion of "Transferability": Many solar lenders market their loans as "transferable".[11] This term can be misleading. A solar loan does not typically transfer automatically to a new homeowner. Instead, the process requires the prospective buyer to independently apply for and be approved for the loan based on their own credit history and financial standing.[11, 13, 14] This is effectively a new loan origination, not a simple assumption. Many buyers may be unwilling to take on the specific terms of the seller's loan or may prefer to finance the home and its features under a single mortgage.[13] Consequently, the most common and cleanest path is for the seller to pay off the loan at closing.[11] Homeowners should be deeply skeptical of the "transferability" sales pitch and should plan for the most probable outcome: the outstanding loan balance will be satisfied from their sale proceeds. The net financial gain from the solar premium is therefore the increase in sale price minus the remaining loan balance.

3. Solar Lease: Renting Your Roof and Complicating Your Sale

• Mechanism: The homeowner pays a fixed monthly fee to a solar company for the right to use the solar panels on their roof. The solar company owns, maintains, and insures the system.[3, 8]
• Real Estate Impact: This is where significant transactional friction begins. Because the system is the personal property of a third party, it cannot be included in the home's appraised value according to the strict guidelines set by Fannie Mae and Freddie Mac, which underpin the vast majority of U.S. mortgages.[3, 4, 5] This means a leased system adds $0 to the official valuation used by lenders. Furthermore, the fixed monthly lease payment is treated as a recurring debt and is factored into the buyer's debt-to-income (DTI) ratio by their mortgage lender. This can reduce the total amount the buyer is qualified to borrow for a mortgage, potentially pushing the home out of their price range or making them a less competitive borrower.[3, 15]
• The Transfer Process: For a sale to proceed, the lease must be transferred to the new buyer. This is not automatic. The buyer must formally apply to assume the lease and meet the solar company's credit requirements, which often include a minimum credit score (e.g., 680 or higher).[15, 16] This introduces a second, independent underwriting process that runs parallel to the mortgage application. It can delay closing and creates an additional hurdle where the entire home sale can be derailed if the buyer is not approved by the solar company.[3]
• The Buyout Option: Many leases offer the seller the option to buy out the remainder of the contract. However, this can be prohibitively expensive, with buyout costs potentially exceeding $20,000.[3] A critical consideration is that the seller would be paying a substantial sum to acquire a used, depreciated asset, and the buyout cost may be far greater than the actual market value of the aging equipment.[16, 17]

4. Power Purchase Agreement (PPA): A Service Contract with Strings Attached

• Mechanism: A PPA is structurally similar to a lease in that a third party owns and maintains the system. The key difference is how the homeowner pays. Instead of a fixed monthly rent, the homeowner agrees to purchase the power generated by the system at a set price per kilowatt-hour ($/kWh).[3] A highly problematic feature of many PPAs is an annual "escalator clause," which automatically increases this price per kWh by a set percentage (e.g., 1-3%) each year.[3]
• Real Estate Impact: The impact on a home sale is virtually identical to that of a lease, and it carries the same fundamental challenges. The system is not a homeowner asset and adds no value to the appraisal.[4, 5] The PPA obligation must be assumed by a credit-qualified buyer, introducing the same DTI and dual-underwriting issues.[3, 17, 18] The escalator clause presents an additional, significant deterrent for many buyers, as they would be inheriting a contract with guaranteed, compounding price increases for their electricity for the next 15-20 years, potentially eroding or even eliminating future savings compared to utility rates.[17]
• The UCC-1 Financing Statement: A common practice for both leases and PPAs is for the solar company to file a UCC-1 Financing Statement with the county. This is not a mortgage lien on the real estate itself, but rather a public notice that the solar company has a security interest in the panels as their personal property or "fixtures." This filing ensures that their ownership of the panels is legally recorded and protected. Title companies must identify and address this UCC-1 filing during the closing process to ensure the title is clear, adding another layer of administrative complexity to the transaction.[12, 19, 20]

The "zero down" marketing appeal of leases and PPAs masks a significant, deferred liability that only becomes fully apparent at the point of sale. These TPO agreements create what can be described as a "triple jeopardy" for the seller. First, the system fails to add any appraised value to the home. Second, the monthly payment actively reduces the buyer's purchasing power by increasing their DTI ratio. Third, the mandatory lease/PPA transfer introduces a separate and uncertain qualification process that can delay or terminate the entire transaction. A TPO system is therefore not a neutral feature; it is a financial encumbrance that can actively reduce the marketability of a home and shrink the pool of qualified buyers. This risk must be the primary consideration for any homeowner contemplating a TPO agreement.

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Table 1.1: Solar Financing Options and Their Real Estate Implications

Sources: [3, 4, 5, 8, 9, 10, 11, 12, 13, 15, 16, 17, 18]

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Quantifying the Value: A Deep Dive into Solar's Impact on Property Appraisals and Market Premiums

Once the foundational decision of ownership is made, the next critical question for a homeowner is: "How much value does an owned solar system actually add?" Answering this requires a two-part analysis. First, an examination of market data reveals what buyers are willing to pay—the "solar premium." Second, a look at the formal appraisal process shows how that premium is officially valued by lenders. The gap between these two figures can be the difference between a smooth sale and a failed transaction.

The Solar Premium: What the Market Data Says

Multiple studies over the last decade have consistently demonstrated that homes with owned solar systems sell for a premium compared to their non-solar counterparts. The size of this premium has evolved as the market has matured.

• Foundational Research (2015): A landmark 2015 study by the Lawrence Berkeley National Laboratory (Berkeley Lab) provided the first large-scale, authoritative estimate of the solar premium. Analyzing nearly 22,000 home sales, the study found that buyers were consistently willing to pay more for homes with host-owned solar systems. This equated to a premium of about $15,000 for an average-sized 3.6 kilowatt (kW) system, or approximately $4 per watt of installed capacity.[21, 22, 23, 24] A parallel study by the National Renewable Energy Laboratory (NREL) found a similar premium of $3.11 per watt for states outside of California.[25] The NREL study also introduced two other compelling findings: homes with solar sold 20% faster, and the value of the system could be depreciated at a rate of about 4% per year for valuation purposes.[25, 26]

• Market Maturation (2019): As solar became more mainstream, Zillow conducted a study in 2019 that found, on average, homes with solar panels sold for 4.1% more than comparable homes without them.[1, 27, 28] This shifted the conversation from a per-watt valuation to a percentage-based premium, which is more intuitive in real estate.

• Recent Data (2024-2025): The most recent analyses suggest that the market's appreciation for solar has continued to grow. A comprehensive 2025 study by SolarReviews, which replicated Zillow's methodology by analyzing over 400 recent home sales, found that the premium has increased significantly. Homes with solar now sell for an average of 6.9% more than non-solar homes.[2, 29, 30] For a median-priced U.S. home of around $417,000, this translates to a potential value increase of nearly $29,000.[2] Another 2025 study confirmed this trend, reporting a 6.8% premium.[31, 32, 33] This increase demonstrates that as electricity rates rise and consumer awareness grows, the value proposition of an owned solar system is becoming even more compelling to homebuyers.

It is important to note some conflicting historical data. One analysis of sales between 2002 and 2013 suggested solar homes took slightly longer to sell.[34] However, this is contradicted by more recent research and the overwhelming trend of growing market acceptance and faster sales cycles.[26, 27, 28] The older data likely reflects a market that was still nascent and less educated about the technology.

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Table 2.1: Summary of Key Solar Home Valuation Studies

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The Appraiser's Gauntlet: From Market Value to Official Valuation

While market data shows what buyers are willing to pay, the official appraised value determines what a lender is willing to finance. This is where many solar home sales face a critical challenge. The process is governed by strict rules, primarily from Fannie Mae and Freddie Mac, the government-sponsored enterprises that buy or secure the majority of U.S. mortgages.

Fannie Mae & Freddie Mac Guidelines: The Non-Negotiable Rules

The guidelines for appraisers are unambiguous and are the single most important factor in how a solar system is officially valued.[4, 5]

• Owned Systems (Cash/Loan): An appraiser may include the value of the solar panels in the appraisal, provided they are owned by the homeowner and considered a fixture to the real estate.[5]
• TPO Systems (Lease/PPA): An appraiser may not include any value for the solar panels in the appraised value of the property. They are considered personal property of a third party.[5, 24]
• Financed as Personal Property: If a solar loan treats the panels themselves as collateral (often confirmed by a UCC-1 filing), they are considered personal property and may not be given contributory value in the appraisal.[5]

This is a critical point: if a system is not owned outright by the homeowner as a fixture to the property, it officially adds zero dollars to the home's appraised value for lending purposes.

The Three Approaches to Value

For an owned system, an appraiser will use one or more of the following standard valuation methods.

1. Sales Comparison Approach: This is the primary and most relied-upon method. The appraiser attempts to find recent sales of similar homes ("comps") in the area, comparing those with solar to those without to determine the market-derived value of the system.[5] The major challenge, especially in less mature solar markets, is the lack of good comps, making it difficult to isolate the value of the solar system.[25]
2. Cost Approach: This method values the system based on the cost to install a new, similar system, minus depreciation for age and obsolescence.[25] Appraisers are explicitly warned by Fannie Mae not to perform a simple dollar-for-dollar valuation based on the original installation cost.[5]
3. Income Approach: This sophisticated method values the system based on the net present value of the future income stream it will generate, in the form of energy savings.[35] While powerful, this requires specialized knowledge of energy markets and discounted cash flow analysis. Tools like PV Value® have been developed to help appraisers perform this calculation in a standardized way.[36, 37]

The existence of an "appraisal gap" is a significant risk in selling a solar home. A buyer might be willing to pay a $25,000 premium based on the market data, but if the appraiser, struggling with a lack of comps or unfamiliar with solar valuation, only assigns a $10,000 contributory value, a $15,000 gap is created. The lender will only finance based on the lower appraised value, which can force the buyer to come up with more cash, lead to a renegotiation of the sale price, or even cause the deal to collapse.

The Key to Unlocking Value: The Appraisal Institute's "Residential Green and Energy Efficient Addendum"

To bridge this appraisal gap and ensure owned systems are valued properly, the real estate and appraisal industries have developed a critical tool: the Appraisal Institute's "Residential Green and Energy Efficient Addendum" (Form 820.07).[38, 39, 40]

This addendum is a standardized form designed to be completed by the homeowner, builder, or solar installer. Its purpose is to provide the appraiser with the specific, verifiable data they need to perform a credible valuation of the home's high-performance features, including the solar system.[41, 42] It is the single most effective tool a homeowner has to defend the value of their solar investment during the appraisal process.

The addendum captures crucial details often missing from standard forms, including [40]:

• Third-Party Verifications: Certifications like ENERGY STAR or a HERS rating.
• Solar System Ownership: Explicitly states whether the system is Owned, Leased, PPA, or has a Solar Loan with a UCC filing.
• Panel Specifications: System size in kW, year installed, estimated annual energy production in kWh, manufacturer, and warranty term.
• Inverter and Battery Details: Manufacturer, model, warranty, and capacity.

A savvy homeowner should proactively ensure this form is completed accurately and given to their real estate agent to include with the listing materials. It should be provided to the appraiser along with all supporting documentation. This transforms the valuation process from one of guesswork to one based on concrete data, giving the appraiser the support they need to recognize the system's full contributory value. The existence and promotion of this form and related valuation tools like PV Value® signal a clear shift in the industry away from subjective estimates and toward standardized, defensible calculations.[35, 37] A homeowner can even use PV Value® to generate their own valuation report to anchor the discussion with their agent and the appraiser in objective analysis.

System Design and Siting: Rooftop vs. Ground-Mount Considerations for Resale

Beyond financing, the physical characteristics of the solar installation—its location, quality, and features—play a significant role in how it is perceived by potential buyers and, ultimately, in its contribution to resale value.

Rooftop Solar: The Standard Approach

The vast majority of residential solar systems are installed on rooftops, making this the most familiar and widely accepted configuration.

• Advantages for Resale: The primary benefit is the efficient use of otherwise non-functional space.[43] Rooftop systems generally have a lower upfront installation cost compared to ground-mounted arrays of the same size, as they do not require separate foundations or extensive trenching.[43, 44] This lower cost basis can make it easier to recoup the investment at sale.
• Disadvantages and Buyer Concerns: The main drawback is that the system's size, orientation, and potential efficiency are constrained by the existing roof's characteristics.[43] The most significant concern for potential buyers is the condition of the roof underneath the panels. A roof nearing the end of its life is a major liability, and the prospect of having to remove and reinstall a solar system to replace it can be a powerful deterrent. For this reason, reputable installers will inspect the roof's condition and often recommend a replacement before installing solar if the roof has less than 10-15 years of life remaining.[25] A seller who can document a recent roof replacement performed just prior to the solar installation can turn this potential negative into a major selling point, offering the buyer peace of mind for decades.[27] Warranties covering roof penetrations are also crucial to allay fears of future leaks.[10, 45]

Ground-Mounted Solar: A Niche with Nuances

For properties with sufficient land, a ground-mounted system can be an alternative. However, its impact on resale value is highly contextual.

• Advantages for Resale: A ground-mounted system can be positioned at the optimal tilt and azimuth (direction) to maximize sun exposure and energy production, potentially leading to greater utility savings than a sub-optimally oriented rooftop array.[43, 44] Access for cleaning and maintenance is also significantly easier and safer.[44] On large properties or rural acreage, a well-designed ground-mount system can be a desirable feature, especially if it serves a dual purpose, such as a solar carport or a shaded pavilion.[46]
• Disadvantages and Buyer Concerns: Ground-mounted systems have a significantly higher upfront cost due to the need for foundations, racking, and trenching.[44, 47] Their most significant drawback for resale is the consumption of usable yard space. While this may be irrelevant on a five-acre property, it can be a major negative on a typical suburban lot where the yard itself is a valuable amenity for recreation or future expansion.[46, 48] The aesthetics can also be a point of contention, with some buyers perceiving a ground-mounted array as an "eyesore".[48] Finally, because they are less common, there is often a lack of comparable sales data, which can make the appraisal process more challenging.[46]

A ground-mount system's impact on value is closely tied to the value of the land it occupies. On a high-value suburban lot, sacrificing a portion of the yard for a ground-mount array may result in a net decrease in overall property value, as the loss of usable land outweighs the benefit of the energy savings. Conversely, on a large rural property where land is abundant, the same system can be a clear asset. Therefore, for the vast majority of residential properties, a rooftop system remains the safer and more conventional choice for preserving or enhancing resale value.

Beyond the Mount: Quality, Size, and Battery Storage

Regardless of where the system is sited, several other factors heavily influence its value to a future buyer.

• System Quality and Warranties: A system built with premium components (panels and inverters) from reputable, financially stable manufacturers will hold its value better than one with generic or off-brand equipment.[6, 25] Buyers and their agents are becoming more sophisticated and will inquire about the manufacturer. A key question is whether the manufacturer is still in business to honor the warranty, which is typically 25 years for panel performance.[49, 50] All warranty documents must be collected and be transferable to the new owner.
• System Size: The system should be appropriately sized to offset a meaningful portion of the home's electricity consumption. An undersized system that provides only minimal savings will be seen as less valuable than a larger system that can nearly eliminate a utility bill.[6, 32]
• Battery Storage: The inclusion of a home battery is rapidly evolving from a luxury add-on to a critical component for maximizing resale value. Initially valued for providing backup power during grid outages—a powerful selling point in areas with unreliable power [51, 52]—batteries now play a crucial economic role. In states that have adopted new "net billing" policies like California's NEM 3.0, the compensation for exporting excess solar power to the grid has been drastically reduced. This makes self-consuming your own solar power the most valuable use of it. Batteries are the key enabling technology for this, allowing homeowners to store cheap solar energy generated during the day for use during expensive evening peak hours.[53, 54, 55] As more states move toward similar policies, a solar system without a battery will be seen as financially incomplete and far less valuable. A homeowner installing a system today should strongly consider including a battery, not just for their own use, but to future-proof the investment's value for the next owner.

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Table 3.1: Rooftop vs. Ground-Mount System Comparison for Resale

Sources: [43, 44, 46, 47, 48]

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Navigating the Regulatory Landscape: Tax Credits, Net Metering, and Policy Risk

A solar system's financial viability is not determined in a vacuum. It is profoundly influenced by a dynamic landscape of government incentives and utility policies. Understanding these external factors, and the risks they entail, is critical for any homeowner making a long-term solar investment.

The Federal Residential Clean Energy Credit: A Ticking Clock

For years, the most significant financial incentive for homeowners going solar has been the federal tax credit, currently known as the Residential Clean Energy Credit. This incentive allows homeowners to claim a credit on their federal income taxes equal to 30% of the total cost of their solar energy system, including panels, inverters, battery storage (if installed with solar), and labor.[9, 50]

This is not a deduction; it is a dollar-for-dollar credit that directly reduces tax liability. For a system costing $20,000, this translates into a $6,000 reduction in taxes owed, bringing the net cost of the system down to $14,000.[9, 25]

A Critical and Time-Sensitive Development: Recent legislation has established a firm end date for this powerful incentive. The 30% residential credit is set to expire completely after December 31, 2025.[56, 57] There is no planned phase-down; the credit will be eliminated entirely for systems placed in service starting in 2026. This creates a closing window of opportunity. A system purchased with the 30% credit has a substantially lower net cost, which dramatically improves its ROI and makes it far easier to recoup the investment at the time of sale.

The expiration of this credit will fundamentally restructure the financial calculation for a future seller. Consider a $20,000 system. A homeowner who installs before the end of 2025 has a net cost of $14,000. With an average resale premium in the range of $15,000 to $29,000, this homeowner stands to recoup their entire net investment, and potentially realize a profit, from the sale premium alone.[21, 30] In contrast, a homeowner who installs the same system in 2026 will have a net cost of the full $20,000. If the resale premium remains the same, they will likely face a net loss on the equipment if they sell in the short-to-medium term. For any homeowner considering both a solar installation and a potential move within the next decade, acting before the 2025 deadline significantly lowers the financial risk of the investment.

Case Study: The California NEM 3.0 Revolution and the Value of Grandfathering

Utility policies, particularly those governing net energy metering (NEM), can have an even greater long-term impact on a system's value than the initial tax credit. Net metering is the mechanism by which utilities credit solar owners for the excess electricity they send to the grid. The recent policy shift in California provides a stark, real-world case study in regulatory risk and its effect on a system's value.

• The Old vs. The New: Under California's previous NEM 1.0 and 2.0 policies, customers were credited for their exported energy at or near the full retail rate of electricity. This meant that on a sunny afternoon, a kWh sent to the grid was worth roughly the same as a kWh pulled from the grid at night.[58] In April 2023, California implemented a new policy known as NEM 3.0, or the "Net Billing Tariff." Under this new structure, the value of exported solar energy plummeted. Instead of the retail rate (often over $0.30/kWh), customers are now credited based on the "Avoided Cost Calculator," which reflects what the utility would have paid for wholesale power. This rate averages around $0.08/kWh—a reduction of roughly 75%.[58, 59]
• Impact on Resale Value: This policy change has created a new, highly valuable asset class in California real estate: a home with a grandfathered NEM 2.0 agreement. These agreements are tied to the solar installation, not the homeowner, and are valid for 20 years from the date the system was interconnected.[60] A home with a NEM 2.0 system offers its owner a guaranteed, long-term financial advantage worth thousands of dollars over the life of the agreement compared to a new system installed under NEM 3.0. This makes the NEM 2.0 status a powerful and marketable asset that can command a significant additional premium from educated buyers.[61] Sellers with these agreements should market them aggressively, calculating the potential net present value of the superior rates as a justification for a higher asking price.
• Legislative Threats and Policy Risk: The value of these grandfathered agreements is not without risk. In 2025, California lawmakers considered legislation (AB 942) that would have retroactively terminated these 20-year contracts upon the sale of a home, forcing the new owner onto the far less favorable NEM 3.0 tariff.[60, 62, 63] While intense opposition from solar owners and industry groups led to the removal of this provision, the attempt itself highlights the ongoing policy risk that utilities and regulators may seek to claw back benefits in the future.[64] A prospective buyer will be keenly interested in the stability and transferability of a grandfathered NEM agreement.
• Implications for New Installations: For anyone installing a system today under NEM 3.0, the financial equation has changed. The drastically lower export rates mean that pairing solar panels with a battery for energy storage is no longer just an option for backup power; it is an economic necessity to achieve significant savings. The strategy shifts from exporting power for credit to storing it for self-consumption during peak hours.[53, 55, 65] This reality will shape the expectations of future buyers, who will see a solar-only system under NEM 3.0 as incomplete.

Homeowners' Associations (HOAs) and Solar Access Laws

On a more local level, homeowners must navigate the rules of their Homeowners' Association. Many states have enacted "solar access laws" that prevent HOAs from unreasonably restricting or prohibiting solar installations. However, HOAs can often still impose reasonable restrictions on the aesthetics or placement of panels.[37] It is imperative that homeowners obtain written approval from their HOA before beginning an installation. Failing to do so could result in fines or a demand to remove the system, creating a significant legal and financial problem that would have to be resolved before a home could be sold.

The Seller's Guide: Navigating the Market with a Solar-Powered Home

With a properly structured solar investment in place, the focus shifts from long-term strategy to near-term sales tactics. Selling a home with an owned solar system can be a significant advantage, but it requires a level of preparation and education beyond that of a typical home sale. This section provides a step-by-step guide for the homeowner who is now ready to list their property, covering everything from documentation and marketing to navigating the complexities of the transfer process.

Preparing for Sale: Documentation, Disclosure, and Due Diligence

A smooth and profitable sale of a solar-equipped home begins with meticulous preparation. The goal is to transform the solar system from a potential source of confusion into a transparent, well-documented asset. This is achieved by assembling a comprehensive information packet, making clear and honest disclosures, and conducting proactive due diligence before the property is ever listed.

Assembling the "Solar Disclosure Packet": Your Key to a Smooth Sale

The single most important preparatory step a seller can take is to create a "Solar Disclosure Packet." This is a physical or digital folder containing every relevant document related to the solar system. By having this information compiled and ready before the first showing, the seller projects transparency, preempts questions, and provides buyers, agents, lenders, and appraisers with the information they need, thereby reducing friction and shortening the due diligence period. This packet serves as a powerful risk mitigation tool, building trust with the buyer and protecting the seller from potential liability.

The Solar Disclosure Packet should include:

• Proof of Ownership: The original installation contract and proof of final payment or a paid-in-full letter from the financing company.[51, 66]
• Financing Documents (if applicable): For a solar loan, include the loan agreement and a current payoff quote from the lender.[11, 12] For a lease or PPA, include the complete agreement, detailing the monthly payment, term, any escalator clauses, and buyout options.[16]
• System and Component Information: A document detailing the system size (in kW), the number of panels, the manufacturer and model numbers for the panels and inverters, and specifications for any battery storage.[67]
• Warranty Documents: All transferable warranties, including the panel performance warranty (typically 25 years), the inverter warranty (10-25 years), the installer's workmanship warranty, and any roof penetration warranty.[10, 49]
• Permits and Approvals: Copies of the original building permits for the installation and the final inspection sign-off from the local jurisdiction.[66] A copy of the HOA approval letter should also be included.
• Performance and Savings History:
  • A record of the system's energy production, ideally from the monitoring software, for the last 12-24 months.[66, 67]
  • Copies of utility bills from the 12 months before the solar installation and the most recent 12 months with solar, to clearly demonstrate the savings.[16, 27]
• Maintenance Records: Receipts and records for any professional cleaning, inspections, or repairs performed on the system.[7, 51]
• Valuation Support: A completed copy of the Appraisal Institute's "Residential Green and Energy Efficient Addendum" (Form 820.07).[42, 66]

Legal Disclosure: What You MUST Tell Buyers

State and local real estate laws require sellers to disclose known material facts about their property. For a solar home, the ownership status of the system is a critical material fact. Failure to clearly and accurately disclose whether the system is owned, financed, or leased can lead to disputes, canceled contracts, and even lawsuits post-sale.[68, 69]

The seller and their listing agent must be explicit about the system's status in all marketing materials, particularly the Multiple Listing Service (MLS) description.[24, 69] Vague language like "home comes with solar" is insufficient and can be misleading if the system is leased. The disclosure must be unambiguous: "Property includes a fully owned 8kW solar system," or "Solar system is subject to a 20-year lease; buyer to assume remaining term."

Pre-Listing Due Diligence

Before listing the home, the seller should undertake several proactive steps:

1. System Inspection: It is highly advisable to hire an independent, qualified solar professional to inspect the system and confirm it is functioning correctly. This provides peace of mind and allows the seller to address any necessary repairs beforehand, rather than having them discovered during the buyer's inspection period.[20, 51]
2. Contact the Solar Company: If the system is subject to a loan, lease, or PPA, the seller must contact the solar company before listing. They need to obtain the precise, up-to-date procedures, timelines, and paperwork required for a payoff or transfer. This information is crucial for setting expectations with potential buyers.[3, 11, 16]
3. Title Check: The seller's real estate agent should order a preliminary title report or an Ownership & Encumbrance (O&E) report. This will reveal if the solar company has filed a UCC-1 financing statement or any other lien against the property or the system itself. Discovering and understanding these encumbrances early is essential to planning for a clear title at closing.[12, 20]

Marketing Your Solar Advantage: From Listing to Closing

Effective marketing is key to realizing the full value of a solar-equipped home. The strategy must go beyond simply listing "solar panels" as a feature; it must tell a compelling story about value, savings, and lifestyle benefits.

Finding the Right Real Estate Agent

The importance of selecting a real estate agent with specific experience and, ideally, training (such as the National Association of Realtors' GREEN designation) in selling homes with solar cannot be overstated.[51, 66] A knowledgeable agent will understand how to price the home correctly, how to articulate the solar value proposition to buyers and other agents, and how to navigate the appraisal and closing process. They will be the seller's most important partner in the transaction.

Crafting the Listing: Highlighting the "Why"

The marketing message should be tailored to appeal to two distinct buyer motivations: the financial "Pragmatist" and the eco-conscious "Idealist." A successful campaign speaks to both.

• Lead with the Financials (For the Pragmatist): The most powerful marketing message is cost savings. The listing should feature concrete, verifiable numbers. Instead of a generic statement, use specifics: "Enjoy an average monthly electric bill of only $25!" or "Owned solar system saves an estimated $2,400 per year on utility costs".[16, 27, 51] If the home has a valuable grandfathered NEM agreement, this should be a headline feature, explaining the locked-in financial advantage.[61]
• Quantify the Environmental Impact (For the Idealist): Translate the system's energy production into relatable environmental metrics. Use the EPA's Greenhouse Gas Equivalencies Calculator to state, for example, that the system's annual production is "equivalent to avoiding the carbon emissions from driving 15,000 miles" or "has the same carbon-sequestering effect as planting 10 acres of forest".[27]
• Emphasize Lifestyle and Security Benefits: Market the non-financial advantages. These include energy independence from the utility, the quiet operation of the system, and, most importantly, the peace of mind offered by battery backup during power outages. In areas prone to grid instability, this is a huge selling point.[51, 52]
• Be Precise in the MLS: The agent must use clear and accurate language in the MLS listing. For an owned system, it should explicitly state "Owned solar system" or "Photovoltaic system owned" and confirm it is included in the sale.[24, 69] Details like the system size in kW and the presence of battery storage should be included in the property description.

Visual Marketing: Showing is Better than Telling

High-quality visuals are essential. The seller should invest in a professional real estate photographer, preferably one who has experience shooting homes with solar panels.[51]

• Highlight, Don't Hide: The photos should showcase the panels in a positive light, using optimal angles to emphasize their sleek, modern appearance rather than treating them as an afterthought.
• Use Drone Photography: For both rooftop and ground-mounted systems, aerial or drone photography is exceptionally effective. It provides a clear perspective of the entire array, its scale, and its integration with the property, conveying a sense of a high-tech, premium feature.[51]

The Transfer Tango: Managing Leases, Loans, and Ownership Handoffs

The administrative transfer of the solar system is often the most complex part of the transaction, particularly for TPO systems. Proactive management is essential to prevent delays that could jeopardize the closing date.

The TPO Transfer Process (Lease/PPA): A Step-by-Step Guide

The transfer of a lease or PPA is not handled by the real estate agents or title company; it is a separate process managed directly with the solar company.[12, 16] This process must run in parallel with the buyer's mortgage application and the escrow process. The seller and their agent must act as project managers to ensure it stays on track.

The typical steps are as follows [16]:

1. Initial Notification: As soon as the home is under contract, the seller formally notifies the solar company of the pending sale and intent to transfer the agreement.
2. Connect Stakeholders: The seller's agent establishes contact with the solar company's designated service transfer specialist.
3. Buyer Application: The buyer is provided with the full lease/PPA agreement and the transfer application. The buyer submits the completed application to the solar company.
4. Mortgage Lender Review: Simultaneously, the buyer must provide the solar agreement to their mortgage lender, who will review its terms and factor the payment into the buyer's DTI ratio.[3, 16]
5. Credit Check: The solar company runs a credit check on the buyer to ensure they meet the financial requirements to assume the agreement.[16, 49]
6. Approval and Documentation: Once the buyer is approved, the solar company issues formal approval and provides the legal transfer documents for signature by the seller, buyer, and the company.
7. Finalization at Closing: The seller must notify the solar transfer specialist once the home sale has officially closed to finalize the transfer of responsibility.

This process can be a bottleneck. The seller and their agent cannot be passive; they must maintain regular communication with the solar company's transfer specialist to monitor the application's progress and ensure a timely completion to avoid delaying the entire real estate transaction.

Handling a Solar Loan at Closing

The process for an owned system with a loan is more straightforward and is managed by the escrow or title company.

• Option 1: Seller Pays Off the Loan (Most Common): This is the cleanest and preferred method. The seller's agent provides the loan information to the title company. The title company requests an official payoff demand from the solar lender. At closing, the outstanding loan balance is paid directly to the lender from the seller's sale proceeds, and any associated lien is released.[8, 12, 13]
• Option 2: Buyer Assumes the Loan (Less Common): This is possible but adds complexity. It requires the buyer to be willing to take on the loan, to be formally approved by the lender, and for all parties to complete the necessary assumption paperwork. This documentation must be finalized and provided to the title company before closing can occur.[11, 12, 13] Due to the added steps and uncertainty, this option is pursued far less frequently.

Overcoming Buyer Objections and Answering the Tough Questions

A prepared seller is a confident seller, and that confidence directly influences a buyer's perception of value. By anticipating common questions and concerns, the seller can effectively reframe potential objections into positive attributes.

Anticipating and Addressing Common Buyer Objections

• Objection: "The system is too old / The technology is becoming obsolete." [3, 52]
  • Effective Response: "That's a valid consideration. That's why we have the full documentation packet. You'll see the panels have a 25-year performance warranty, and our recent production data shows they are still operating at high efficiency. Unlike phones, solar panel technology evolves slowly, and this system is built for decades of reliable service." [70]
• Objection: "I'm worried about maintenance costs and repairs." [52, 71]
  • Effective Response: "One of the great things about modern solar is how low-maintenance it is, typically just requiring occasional cleaning. For peace of mind, the system comes with transferable warranties covering the panels, the inverters, and the installation workmanship, so you're protected from unexpected defects."
• Objection: "What if the panels damage the roof or cause leaks?" [45, 52]
  • Effective Response: "That's a primary concern for any responsible installation. The installer provides a dedicated roof penetration warranty to cover their work. We also had the roof inspected before installation, and in fact, the panels now provide an extra layer of protection from sun and hail for the part of the roof they cover." [45]
• Objection: "This seems too complicated; I don't want to deal with a lease." [3, 17]
  • Effective Response (for TPO): "We understand it's an extra step, which is why we've gathered all the paperwork and have the direct contact for the solar company's transfer specialist to make it as smooth as possible. The key benefit is that you start saving on your electricity bill from day one."
  • Effective Response (for Owned): "That's the best part—since we own the system outright, there's nothing to transfer. It's just part of the house, like the furnace or water heater, and it saves you money every month."
• Objection: "I'm not sure about the aesthetics." [48, 72]
  • Effective Response: "We understand appearance is subjective. Many people find they barely notice them after a few weeks. When you consider they can lower your monthly living costs by over $200 and reduce your carbon footprint, the financial and environmental benefits become the most attractive feature."

Preparing for Key Buyer Questions (The "Solar FAQ" Sheet)

To streamline communication during showings, the seller should prepare a simple, one-page "Solar FAQ" sheet to include in the marketing materials. This sheet should provide quick answers to the most common questions a buyer will have [49, 50, 67, 73]:

• Ownership: Is the system owned or leased?
• System Size: What is the system's capacity in kilowatts (kW)?
• Age: What year was the system installed?
• Production: How many kilowatt-hours (kWh) did the system produce last year?
• Savings: What is the average monthly electricity bill with solar?
• Components: Who is the manufacturer of the panels and inverters?
• Warranty: What are the terms of the key warranties and are they transferable?
• Battery: Is there a battery storage system? If so, what is its capacity?

By mastering this information and presenting it professionally, the seller transforms from a simple homeowner into an educated advocate for their property's most valuable features. This preparedness builds the buyer's confidence, which is essential for overcoming hesitation and securing the full financial premium that a well-structured solar investment can command.

Conclusion and Recommendations

The integration of solar energy into residential real estate represents a paradigm shift, transforming a home from a passive consumer of energy into an active producer of value. However, this analysis demonstrates conclusively that the financial success of this transformation upon resale is not automatic. It is the direct result of strategic foresight and diligent preparation. The difference between a solar system that adds tens of thousands of dollars to a home's value and one that becomes a transactional quagmire is determined almost entirely by decisions made before installation.

The evidence leads to several key conclusions and actionable recommendations for homeowners:

1. Ownership is Paramount. The single most critical factor is ownership. An owned system (purchased with cash or a loan) is a real property asset that adds verifiable value. A third-party owned system (lease or PPA) is a long-term financial encumbrance that does not add to the appraised value and introduces significant friction into a sale. Homeowners whose primary goal includes preserving or enhancing resale value should exhaust all options to own their system. The "zero-down" allure of TPO agreements conceals substantial downstream costs and complications.

2. Documentation is the Key to Valuation. A market premium for solar exists, but it can only be captured if it can be defended during the appraisal process. A seller cannot simply expect an appraiser to recognize the system's value. They must proactively provide the necessary data through a comprehensive "Solar Disclosure Packet," with the Appraisal Institute's "Residential Green and Energy Efficient Addendum" serving as the cornerstone of this documentation.

3. Policy Creates Both Risk and Opportunity. The regulatory landscape is dynamic. The impending expiration of the 30% federal tax credit after 2025 creates a finite window to install solar at a significantly lower net cost, reducing financial risk at resale. Simultaneously, shifts in state-level net metering policies, as exemplified by California's NEM 3.0, are redefining the value proposition. A grandfathered NEM agreement is now a marketable asset, while new installations in such markets require battery storage to be economically viable and attractive to future buyers.

4. Preparation Precedes Profit. A successful sale requires proactive management. This includes selecting a real estate agent with solar expertise, crafting a marketing strategy that highlights quantifiable benefits, and meticulously managing the administrative transfer process. The seller's confidence and preparedness are directly proportional to a buyer's willingness to pay a premium.

For the financially astute homeowner, a solar energy system should be approached with the same rigor as any other major capital investment. By prioritizing ownership, meticulously documenting the asset, understanding the regulatory environment, and preparing diligently for the sale, a homeowner can ensure their investment in clean energy pays dividends both in reduced utility bills today and in a higher, more easily attained sale price tomorrow.

Appendices

Pre-Installation Decision Checklist

Use this checklist to guide your strategic decisions before signing any solar contract to ensure your system is an asset, not a liability, at resale.

1. Financing and Ownership (The Most Critical Decision)

• <input disabled="" type="checkbox"> Explore Ownership First: Have I received quotes for both a cash purchase and a solar loan?
• <input disabled="" type="checkbox"> Understand Loan Terms: If considering a loan, is it secured (tied to my property) or unsecured? Do I understand that it will likely need to be paid off at closing?
• <input disabled="" type="checkbox"> Scrutinize TPO Agreements: If considering a lease or PPA, have I read the full contract?
  • <input disabled="" type="checkbox"> Do I understand that the system will not add to my home's appraised value?
  • <input disabled="" type="checkbox"> Do I know the exact monthly payment/price per kWh and the annual escalator rate?
  • <input disabled="" type="checkbox"> Do I understand the buyer must be credit-approved to assume the contract?
  • <input disabled="" type="checkbox"> Do I know the cost and terms of a potential buyout?
• <input disabled="" type="checkbox"> Decision: My chosen financing path is ________________ because it best aligns with my long-term real estate goals.

2. System Design and Components

• <input disabled="" type="checkbox"> Roof Condition: Is my roof less than 15 years old and in good condition? If not, have I received a quote to replace it before the solar installation?
• <input disabled="" type="checkbox"> System Siting: Is a rooftop system feasible? If considering a ground-mount, do I have ample land where it will not negatively impact my property's core usability and value?
• <input disabled="" type="checkbox"> Component Quality: Has the installer provided specifications for the panels and inverters? Are they from reputable manufacturers with strong, transferable warranties?
• <input disabled="" type="checkbox"> Battery Storage: Have I considered adding a battery?
  • <input disabled="" type="checkbox"> Is my area prone to power outages?
  • <input disabled="" type="checkbox"> Is my state considering or has it implemented new net metering rules (like NEM 3.0) that make self-consumption more valuable?

3. Installer and Contracts

• <input disabled="" type="checkbox"> Installer Due Diligence: Have I received quotes from at least three reputable, licensed, and insured installers?
• <input disabled="" type="checkbox"> Review Warranties: Does the installer provide a workmanship warranty and a roof penetration warranty in addition to the manufacturer warranties?
• <input disabled="" type="checkbox"> Read the Fine Print: Have I read the entire installation contract before signing?

4. Regulatory and Local Factors

• <input disabled="" type="checkbox"> Tax Credit Timeline: Do I understand that the 30% federal tax credit expires after Dec. 31, 2025, and my system must be installed and operational by then to qualify?
• <input disabled="" type="checkbox"> HOA Approval: If I have an HOA, have I submitted my plans and received written approval for the installation?

Home Seller's Solar Documentation Checklist

Assemble these documents into a "Solar Disclosure Packet" to provide to your agent, potential buyers, and the appraiser.

Section 1: Ownership and Financials

• <input disabled="" type="checkbox"> Proof of Ownership: Copy of the final, paid-in-full invoice or a "Permission to Operate" letter showing a zero balance.
• <input disabled="" type="checkbox"> Loan Documents (if applicable):
  • <input disabled="" type="checkbox"> Copy of the original loan agreement.
  • <input disabled="" type="checkbox"> A current payoff quote from the lender (valid through your expected closing date).
• <input disabled="" type="checkbox"> Lease/PPA Documents (if applicable):
  • <input disabled="" type="checkbox"> The complete, signed lease or PPA contract.
  • <input disabled="" type="checkbox"> Contact information for the solar company's transfer department/specialist.
  • <input disabled="" type="checkbox"> A schedule of payments, including any future escalations.

Section 2: System Specifications and Warranties

• <input disabled="" type="checkbox"> System Overview: A summary sheet with:
  • <input disabled="" type="checkbox"> Installer's name and contact information.
  • <input disabled="" type="checkbox"> Installation date.
  • <input disabled="" type="checkbox"> System size in kilowatts (kW).
  • <input disabled="" type="checkbox"> Number of panels.
  • <input disabled="" type="checkbox"> Panel manufacturer and model number.
  • <input disabled="" type="checkbox"> Inverter manufacturer and model number.
  • <input disabled="" type="checkbox"> Battery manufacturer, model, and capacity (kWh), if applicable.
• <input disabled="" type="checkbox"> Warranty Certificates: Copies of all transferable warranties:
  • <input disabled="" type="checkbox"> Solar Panel Performance Warranty (e.g., 25 years).
  • <input disabled="" type="checkbox"> Inverter Warranty (e.g., 10-25 years).
  • <input disabled="" type="checkbox"> Installer Workmanship Warranty (e.g., 10 years).
  • <input disabled="" type="checkbox"> Roof Penetration Warranty (e.g., 5-10 years).

Section 3: Performance and History

• <input disabled="" type="checkbox"> Permits: Copy of the final, signed-off building permit from your local municipality.
• <input disabled="" type="checkbox"> Utility Bills: 12-24 months of utility bills showing electricity usage and costs with the solar system active. (Bonus: include a few bills from before solar to show the contrast).
• <input disabled="" type="checkbox"> Production Data: A printout from your solar monitoring software showing annual and monthly energy production (kWh).
• <input disabled="" type="checkbox"> Maintenance Log: Records of any professional cleaning, inspections, or repairs.

Section 4: Appraisal and Marketing Support

• <input disabled="" type="checkbox"> Appraisal Institute Green Addendum: A completed copy of AI Form 820.07.
• <input disabled="" type="checkbox"> Photos: High-quality digital photos of the system, including drone shots if available.

A Homeowner's Guide to the Appraisal Institute's Green Addendum

The "Residential Green and Energy Efficient Addendum" (Form 820.07) is the most important tool for communicating your solar system's value to an appraiser. Here is a simplified guide to the key "Solar Panels" section. You or your installer should complete this and provide it to your real estate agent and appraiser.

Solar Photovoltaic (Electric) System Section

• Type of Ownership: This is the first and most critical field.
  • Check "Owned" if you paid cash or have a loan where you are the legal owner.
  • Check "Leased" or "Power Purchase Agreement (PPA)" if you have a TPO system.
  • Check "Solar Loan with UCC Filing" if your loan is secured by the panels as personal property. Note: If any box other than "Owned" is checked, the appraiser cannot add value for the system. [40]
• Panel Specifications:
  • System Size (kW): This is the total capacity of your system (e.g., 8.5 kW). Find this on your contract.
  • Year Installed: The year the system became operational.
  • Energy Production (kWh): Your system's estimated or actual annual production. Use data from your monitoring app or contract.
  • Source of Energy Production Estimate: Where the production number came from (e.g., "Installer's Proposal," "PVWatts Calculator," "12-Month Monitoring Data").
  • Manufacturer: The brand of your solar panels (e.g., Qcells, REC, SunPower).
  • Warranty on Panels: The length of the performance warranty (usually 25 or 30 years).
• Array Placement:
  • Orientation: Check "Fixed Mount" for standard rooftop or ground systems.
  • Tilt/Slope: The angle of the panels. Your installer can provide this.
  • Azimuth: The direction the panels face in degrees (e.g., 180° is due South).
• Inverter Specifications:
  • Number of Inverters: How many central inverters or microinverters you have.
  • Year Installed, Wattage, Manufacturer, Warranty Term: Fill in the details for your inverter(s). This is on your contract.
• Energy Storing Batteries:
  • If you have a battery, fill in the Battery Type (e.g., Lithium-Ion), Manufacturer (e.g., Tesla, Enphase), Storage Capacity (kWh) (e.g., 13.5 kWh), and Warranty Term.

Why This Matters: By providing this specific, verifiable data, you give the appraiser the factual basis required by lending guidelines to perform a credible valuation using the Sales, Cost, or Income approaches. Without it, they may be forced to assign little or no value to your owned system.

Glossary of Key Solar and Real Estate Terms

• Appraisal: A professional appraiser's opinion of a property's market value, used by lenders to determine how much they are willing to finance.
• Debt-to-Income (DTI) Ratio: The percentage of a borrower's gross monthly income that goes toward paying their monthly debt payments. Lenders use this to measure a borrower's ability to manage payments and repay debts.
• Fannie Mae / Freddie Mac: Government-sponsored enterprises that buy mortgages from lenders, securitize them, and sell them to investors. Their underwriting guidelines are the standard for the vast majority of U.S. mortgages.
• Home Equity Line of Credit (HELOC): A revolving line of credit that uses a home as collateral.
• Kilowatt (kW): A measure of power, equal to 1,000 watts. Solar system size is measured in kW.
• Kilowatt-hour (kWh): A measure of energy, equal to using one kilowatt of power for one hour. Electricity bills and solar production are measured in kWh.
• Net Energy Metering (NEM): A utility billing mechanism that credits solar energy system owners for the electricity they add to the grid.
• Power Purchase Agreement (PPA): A third-party ownership model where a homeowner agrees to purchase the power generated by a solar system on their roof at a set price per kWh. The solar company owns the system.
• PV Value®: A software tool, endorsed by the Appraisal Institute, used to calculate the value of a photovoltaic (PV) system based on the income (energy savings) it is projected to produce.
• Secured Loan: A loan backed by an asset, such as a house, which serves as collateral for the loan.
• Solar Lease: A third-party ownership model where a homeowner pays a fixed monthly fee to rent a solar system. The solar company owns the system.
• Third-Party Owned (TPO): A general term for solar financing models (leases and PPAs) where the system is owned by a solar company, not the homeowner.
• UCC-1 Financing Statement: A legal form that a creditor files to give notice that it has a security interest in a debtor's personal property. Solar companies often file these for TPO systems to secure their ownership of the panels.
• Unsecured Loan: A loan that is not protected by any collateral.