Solar Panels and Real Estate: What Buyers and Sellers Actually Need to Know

Solar panels are showing up on more homes across Tennessee, and with them come real questions — not just about energy savings, but about what happens when a home with solar hits the market. The answer isn't simple, and it depends heavily on one critical factor that most people don't ask about until it's too late: do the sellers own the panels, or are they leasing them?

This post breaks down what solar means for both sides of a transaction, without the green-energy hype or the reflexive skepticism.

The Ownership Question Changes Everything

Before anything else, buyers and sellers need to establish how the solar system was acquired.

• Owned outright or through a loan: The system is part of the home. It can be sold with the property like any other fixture.
• Power Purchase Agreement (PPA) or lease: A third-party company owns the panels. The homeowner has a contract — often 20–25 years — to buy the power generated at a set rate, or pay a monthly lease fee. This contract must be transferred to the buyer or paid off at closing.

The lease/PPA scenario is where most solar real estate deals get complicated. Buyers inherit a contract, not a system. That distinction matters.

For Sellers: What You Need to Know

If You Own Your Panels

Pros:

• The system is an asset you can market. Studies — including research from Lawrence Berkeley National Laboratory — consistently show owned solar adds measurable value in most markets, often in the range of $3–$4 per watt of installed capacity.
• Buyers who understand solar will recognize the reduced utility costs as a real financial benefit.
• No third-party approval required at closing.

Cons:

• Appraisers in many markets — especially in areas where solar is still uncommon — struggle to accurately value solar. Your system may add less to your appraised value than you expect, or nothing at all if comparable sales with solar don't exist nearby.
• Tennessee is not California. The solar premium is lower in markets with relatively lower electricity rates. Montgomery County buyers may not pay you back dollar-for-dollar for a $30,000 system.
• You'll need documentation: the installation contract, equipment specs, warranty information, and any net metering agreements with your utility.

Bottom line for owned systems: Be realistic about what you'll recoup. Price based on market comps, not your installation invoice.

If You Have a Lease or PPA

Pros:

• You likely paid little or nothing upfront for the system.
• You've been paying lower electricity rates — which is the whole pitch of these agreements.

Cons:

• This is a significant liability at sale. You cannot simply sell the home and walk away from the lease.
• The buyer must qualify to assume the contract, which involves a credit check and approval from the solar company.
• If the buyer won't assume it, you must pay off the remaining lease balance — which can be tens of thousands of dollars.
• Leases create friction. Some buyers won't touch a leased solar home. Deals fall through over this more often than most sellers anticipate.
• You are required to disclose the lease. Failure to disclose is a serious legal exposure.

Bottom line for leased systems: Get your contract documents before you list. Know the buyout amount. Factor it into your net proceeds. Work with an agent who knows how to present this accurately to buyers without derailing the sale.

For Buyers: What You Need to Evaluate

If the Panels Are Owned

Pros:

• Potentially lower monthly utility costs from day one.
• The system transfers to you as part of the home — no ongoing obligation to a third party.
• Equipment and workmanship warranties often transfer to new owners (verify this).
• In a grid outage, a system with battery storage can provide backup power — increasingly relevant given weather events in our region.

Cons:

• You're paying for the system in the purchase price, directly or indirectly. Make sure the home is priced relative to comparable homes, not just relative to what the sellers paid for solar.
• Systems age. Panels degrade slowly — typically losing 0.5–1% efficiency per year — but inverters generally need replacement around year 10–15 (cost: $1,000–$3,000+). Ask about equipment age and maintenance history.
• If the roof needs work, solar panels have to come off first. Roof replacement with solar adds cost and complexity.
• Not all solar systems are sized appropriately. Ask for at least 12 months of utility bills and production data before accepting the seller's claims about savings.

If the Panels Are Leased or Under a PPA

Pros:

• Monthly electricity costs may be lower than market rate — but read the contract carefully. Rates can escalate over time.
• You may have no upfront cost to assume the lease.

Cons:

• You're taking on a long-term financial obligation to a third party. Read the full contract — escalator clauses, transfer fees, and termination penalties are common.
• The solar company has a lien or interest on the property. This must be addressed in the title process.
• Some lenders have tightened requirements around leased solar. VA loans in particular have had documented issues with homes where leased solar panels are attached to the roof — the attachment creates a question about the lien and the VA's collateral. This is worth discussing with your lender early if you're using a VA loan.
• If you ever want to remove the system, you may not have the right to do so without paying off the contract.

Bottom line for buyers: A leased system isn't automatically a dealbreaker, but it requires due diligence. Have your attorney review the contract before closing, not after.

Tennessee-Specific Considerations

A few things worth knowing for this market specifically:

• Net metering in Tennessee: TVA (Tennessee Valley Authority) and its local power companies offer limited net metering. The credit rates are modest compared to states like California or New Jersey. This directly affects the financial case for solar — the utility will not buy back your excess power at retail rates.
• Electricity rates: Tennessee has historically had below-average electricity rates nationally. Lower baseline costs mean longer payback periods for solar installations.
• Military buyers: Fort Campbell area buyers frequently use VA loans. As noted above, leased solar can complicate VA financing. If you're a seller with leased panels and expect military buyers, this is a real issue to plan around.
• Appraisal challenges: The Clarksville/Montgomery County market does not yet have a robust set of solar comps. Appraisers may not be able to add value for solar, particularly if the installation is older or the system is undersized.

Questions Every Buyer Should Ask

1. Are the panels owned outright, financed, or leased/PPA?
2. If financed: what is the outstanding loan balance, and does it transfer at closing?
3. If leased: what is the monthly payment, the escalation clause, the buyout amount, and the remaining contract term?
4. How old is the system, and has it been serviced?
5. What is the inverter type, age, and warranty status?
6. Can you provide 12 months of utility bills and solar production data?
7. Is there battery storage included? If so, what is its age and warranty?
8. Has there been any roof work done since installation, and was the system removed and reinstalled properly?

The Bottom Line

Solar can be a genuine asset in a real estate transaction — or a significant complication, depending on how the system is owned and whether both parties understand what's actually changing hands. The technology itself is not the problem. The paperwork, the contracts, and the appraisal gaps are where deals get derailed.

For sellers: get your documentation in order before you list and price honestly.

For buyers: understand what you're buying. "Solar home" is not a simple category.

If you have questions about how solar affects a specific property you're considering buying or selling in the Clarksville or greater Nashville area, reach out — this is exactly the kind of detail that matters in a transaction.

This post is for informational purposes. Real estate transactions involving solar energy systems involve legal and financial considerations that vary by contract, lender, and local market. Work with qualified professionals — real estate, legal, and financial — before making decisions.