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Selling home with owned PWs and rented solar

destructure00

Active Member
Mar 2, 2019
1,476
1,629
Scottsdale, AZ
We are getting ready to sell our house. I have two powerwalls, owned free and clear. Also have 11.34kw solar, which is rented. The solar is split into two systems...one "medium" at $100/month, and one "small" at $50/month. Added them at different times, which is why they are separate.

We will be listing our house for sale in 2-3 weeks. The way I see it, there are 3 outcomes when we sell, minus the overly complicated scenarios of splitting the solar and powerwalls by keeping one and getting rid of the other.

1) Buyer assumes solar rental contracts, and PWs are included in the purchase. Basically house conveys as-is to buyer.

2) We remove the solar (one contract says no removal fee and the other says $2500 removal fee, so charges are TBD) and take the PWs with us to the new house. This seems like a PITA for a couple reasons...first, there's the removal timeline which may or may not align with our selling schedule, and I have no idea what the permitting looks like this. Second if we take the PWs with us, it's not enough to power the new house (current has one A/C and new has three), so I'd have to buy more, which I really don't want to do, at least in the near future.

3) Buyer takes PWs as part of the house sale and buys the solar separately from Tesla at whatever they consider to be fair market value. TBD whether the purchase is part of the sale or happens after.

My realtor had a deal that she said was extremely difficult in the past, but it included a Solar City system that was later bought out by Tesla, and I'm not sure if it was a lease or rental or who financed it. But apparently it was difficult to have the buyer buy it out, and the price from Tesla kept changing, there were attorneys involved and it sounded like a mess. So she is recommending that we just have the system removed prior to sale to make things easier. She thinks we will lose prospective buyers due to the complexity of the transaction, and assuming leases is generally a big negative, even though this isn't a lease.

My thought is that it would be a lot easier to have the buyer assume the rental contracts, and then they can decide after the fact if they want to cancel them or continue or buy them out. Just seems easier to me, but of course I'm biased because that's the easiest option for me.

Has anyone here dealt with transferring a rental solar system to a buyer, and what was the outcome? Was it simple and easy? How about removal? What was the timeline on that, and the quality of work? What was the feedback from prospective buyers on whether they wanted the solar or not?

Any experience or advice on this matter would be greatly appreciated.
 

nwdiver

Well-Known Member
Feb 17, 2013
8,278
10,936
United States
So she is recommending that we just have the system removed prior to sale to make things easier. She thinks we will lose prospective buyers due to the complexity of the transaction, and assuming leases is generally a big negative, even though this isn't a lease.

Sounds like your realtor is being lazy. I would at least try it on the market 'as is' especially with how hot the market is. It's a HUGE waste of everyones time to remove a solar system... then you're also left with unsightly feet on the roof.
 
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jjrandorin

Moderator, Model 3, Tesla Energy Forums
Nov 28, 2018
10,336
11,680
Riverside Co. CA
Dont plan on the buyers buying out the solar at "whatever market value" is. thats not how it works. The "value" of that system is going to be Much (much) more than it would cost to buy a system new (source, me, trying to buy out my leased 8.6 5 year old system, that tesla gave me a price to buy of 36k on, when a new 12kW system WITH 2 POWERWALLS, would be 32k).

The choices will be either getting them to assume the rental (which people dont want to be bothered with), seeing if you can pay the lease off with proceeds (so they dont have to deal with it) or having it removed.

The cheapest for you is going to be getting it removed, if you can do that for 2500. Since you dont own the solar, you want to remove it from the equation, in my opinion, or you are going to lower your pool of buyers. You could leave the powerwalls, but people wont value them without the solar. You are better off taking the powerwalls with you and removing the solar, then selling the home.

You could possibly sell the powerwalls used if you dont want them, or if you are buying a new home, take them with you, and buy solar in your new place. I would never lease a system again, even though it was the best decision when I made it in 2015.
 

omarsultan

Active Member
Supporting Member
Jun 22, 2013
4,069
14,759
Northern California
We are getting ready to sell our house. I have two powerwalls, owned free and clear. Also have 11.34kw solar, which is rented. The solar is split into two systems...one "medium" at $100/month, and one "small" at $50/month. Added them at different times, which is why they are separate.

We will be listing our house for sale in 2-3 weeks. The way I see it, there are 3 outcomes when we sell, minus the overly complicated scenarios of splitting the solar and powerwalls by keeping one and getting rid of the other.

1) Buyer assumes solar rental contracts, and PWs are included in the purchase. Basically house conveys as-is to buyer.

2) We remove the solar (one contract says no removal fee and the other says $2500 removal fee, so charges are TBD) and take the PWs with us to the new house. This seems like a PITA for a couple reasons...first, there's the removal timeline which may or may not align with our selling schedule, and I have no idea what the permitting looks like this. Second if we take the PWs with us, it's not enough to power the new house (current has one A/C and new has three), so I'd have to buy more, which I really don't want to do, at least in the near future.

3) Buyer takes PWs as part of the house sale and buys the solar separately from Tesla at whatever they consider to be fair market value. TBD whether the purchase is part of the sale or happens after.

My realtor had a deal that she said was extremely difficult in the past, but it included a Solar City system that was later bought out by Tesla, and I'm not sure if it was a lease or rental or who financed it. But apparently it was difficult to have the buyer buy it out, and the price from Tesla kept changing, there were attorneys involved and it sounded like a mess. So she is recommending that we just have the system removed prior to sale to make things easier. She thinks we will lose prospective buyers due to the complexity of the transaction, and assuming leases is generally a big negative, even though this isn't a lease.

My thought is that it would be a lot easier to have the buyer assume the rental contracts, and then they can decide after the fact if they want to cancel them or continue or buy them out. Just seems easier to me, but of course I'm biased because that's the easiest option for me.

Has anyone here dealt with transferring a rental solar system to a buyer, and what was the outcome? Was it simple and easy? How about removal? What was the timeline on that, and the quality of work? What was the feedback from prospective buyers on whether they wanted the solar or not?

Any experience or advice on this matter would be greatly appreciated.
We have a Solar City/Tesla Energy PPA and our contract gives us the option to buy the system. Assuming your is similar, one other option would be to price the buyout into the sales price of the house, then pay off Tesla Energy as part of the transaction. That way your buyer gets the solar without the hassle of assuming the rental agreement.
 

jjrandorin

Moderator, Model 3, Tesla Energy Forums
Nov 28, 2018
10,336
11,680
Riverside Co. CA
We have a Solar City/Tesla Energy PPA and our contract gives us the option to buy the system. Assuming your is similar, one other option would be to price the buyout into the sales price of the house, then pay off Tesla Energy as part of the transaction. That way your buyer gets the solar without the hassle of assuming the rental agreement.

I just posted my experience with what " the buyout" for a PPA looks like, and that was like a month ago, not 2 years ago or something. It wont make financial sense for you to buy out your PPA because they will charge you more than a new one would cost right now (significantly so), and try to explain it to you with accounting rules.

If you have had it for 5 years (the minimum time to request a buyout of your PPA), ask them and find out how much it would be. You will likely be as surprised as I was. I expected it to be the same price as a new one right now. I didnt expect it to be 6-7k more than a system that is 50% larger, when that larger system ALSO came with 2 powerwalls.

I have 2 powerwalls I purchased myself, but thats not material to this discussion. A 12k system with 2 powerwalls was 6k ish cheaper than the buyout price for my 8.6kW PPA system (with no powerwalls).. and even typing that out it sounds completely, and utterly silly.
 

arnolddeleon

Supporting Member
Supporting Member
Jul 21, 2012
892
948
SF Bay Area
As example I bought an investment property in AZ in 2018, I calculated the *negative* of value taking over the Tesla (Solar City) lease and adjusted our offer accordingly. I love solar but in general new solar is cheaper than old solar. So the value of existing solar tends to be lower the "book" value. Possible extenuating circumstances are no waiting and legacy net metering/rates. So those factors could add some value back.

If I was the buyer I would look at my obligations to Tesla. I might play chicken with Tesla, if they don't price the system properly they're stuck with an asset that is not earning them anything. If they choose to remove the system they will be spending precious labor to remove the system.

On the house I live in one of the systems a leased system. I've looked at the buyout on that one and it makes no sense. It will be interesting what Tesla offers when the lease ends in about 2 years. I think they are obligated to remove it if I don't extend my lease so I expect to have some leverage. I'm hoping to buy it for a next to nothing as is.
 

hayhayday

Member
Dec 8, 2020
31
21
94952
If I was buying I would at minimum want a $2500 + transfer fee as a credit from you to take over the rental and I would imagine many would assume it similar to a long term lease and be turned off so its likely best to at least the free removal one taken off if not both. It would be interesting to see if they offer a lower buyout once you ask them to remove it as used panels and an inverter are unlikely worth more than a couple thousand less the labor to remove them.
 

destructure00

Active Member
Mar 2, 2019
1,476
1,629
Scottsdale, AZ
Thanks for the feedback so far, I'm leaning towards removal at this point. Just to clarify since there's been some discussion of lease buyouts - this is not a lease, it's a rental. Splitting hairs I guess, but the buyer can assume the rental as-is and continue to pay the $150/month forever. Just in case that got lost in my original post. Then also the other options of a buyout or removal.
 

jjrandorin

Moderator, Model 3, Tesla Energy Forums
Nov 28, 2018
10,336
11,680
Riverside Co. CA
Thanks for the feedback so far, I'm leaning towards removal at this point. Just to clarify since there's been some discussion of lease buyouts - this is not a lease, it's a rental. Splitting hairs I guess, but the buyer can assume the rental as-is and continue to pay the $150/month forever. Just in case that got lost in my original post. Then also the other options of a buyout or removal.

IMO a rental situation will make even less sense to a buyer. Your typical person wont understand why they still have a bill from the local power company if they are ALSO paying a rental fee for "power" to tesla. the person who is going to understand how all that works, is going to be one who wants to own their solar, not rent it, most likely, so will actually charge you for it (reduce price), likely more in the sales price than the 2500 to remove it.

Much less headache in your case just to get tesla to remove it (or see if they come back with an offer on it thats reasonable when you tell them to take it off your home). Best case, they give you a decent price to buy it so you can include "Owned solar!" in the listing, which is completely different.

"Owned solar + powerwall backup" likely increases your list price, rented solar at best is neutral but likely costs you some in the final negotiaton (in general terms, every market is different).
 

BGbreeder

Member
Jun 19, 2020
362
225
Bay Area
Rented solar. Knowing that solar degrades with time, if I were buying, I would deduct the full rental costs upfront from an offer. No cancel that, I wouldn't bother making the offer, because I would bet that the seller wouldn't value the NPV of the rental contract accordingly.

If I were you, I would do what it takes to dump the rental. Advertise the house as solar ready with roof mounts. My suspicion is that you will find it difficult to clean up at this late date.

All the best,

BG
 
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