The Cash Buyer Solar Blind Spot on a Claremont Purchase

Cash buyers enjoy a simpler transaction, and most of the simplification is genuine. No loan approval, no appraisal contingency, fewer parties, a shorter calendar.

There is one thing they lose, and on a solar home it matters.

They lose the LENDER.

The unpaid due diligence a lender performs

A financed transaction has an institution in it whose money is at risk and whose processes are designed around that risk. Those processes catch things.

A lender orders an appraisal, and appraisals surface improvements that do not match the record. A lender examines title and takes a position on what may remain against the parcel. A lender has views about obligations collected through the tax roll. A lender asks about equipment ownership because it affects what its collateral actually consists of. Its whole approach to a solar property is described in the underwriting guide.

None of that is done as a favour to the buyer, but the buyer benefits from it. It is a second set of eyes, professionally motivated, running in parallel.

Pay cash and that entire layer is gone. Nothing replaces it automatically. The buyer either performs the equivalent work themselves or the work does not get done.

What the cash buyer has to pick up

Five things, and none of them are expensive relative to a purchase price.

THE TITLE REPORT, READ PROPERLY. A cash buyer still gets a preliminary report, and it is easy to treat as a formality when no lender is scrutinising it. Read the exceptions, get the underlying documents, and identify every entry that relates to the solar. The method is in the title report guide.

THE OWNERSHIP QUESTION. Owned, financed, leased or service agreement. This is the fork everything else follows from, and it is set out in the ownership guide. Nobody else in a cash transaction is professionally obliged to ask it.

THE PERMIT RECORD. A cash purchase has no appraiser to notice that improvements are not reflected in the city's file. Pull the permit history yourself. It is inexpensive and it is one of the few checks that can be done before writing an offer.

THE APPRAISAL YOU ARE NOT REQUIRED TO GET. Consider ordering one anyway, particularly where solar is a significant part of what you believe you are paying for. How solar is actually treated in a valuation is covered in the appraisal guide, and the answer is frequently not what sellers expect.

THE TAX BILL. Read the itemized lines. An obligation being collected through the tax roll continues after a sale, and no lender is going to raise it for you.

Speed is the real hazard

Cash offers compete on certainty and on calendar. Short escrows are the point.

But every solar item depends on a third party who has never heard of your closing date. A provider approving a transfer, a lienholder producing a payoff demand, a title company recording a release, a city closing out an old permit. Those take what they take.

A ten-day cash escrow on a house with a third-party-owned array is a plan that relies on a company you have no relationship with moving quickly for no reason.

Either build the time in, or make the solar resolution a condition with a date attached, or accept that you may close with the situation unresolved. Those are the three options and only the third one is chosen by accident.

The waiver problem

Cash buyers frequently waive contingencies to win. That is a strategy, and it is a real one.

Understand precisely what it costs on a solar home. A waived investigation contingency removes the exit you would otherwise have if the array turns out to be unpermitted, non-functional, or subject to an agreement you cannot assume.

Do the diligence BEFORE the offer where you can. The permit history, the tax bill and, if the seller will provide them, the solar contract and production history are all obtainable without an escrow. Doing that work up front is what makes a short, clean offer a considered decision rather than a bet.

The wider negotiating position on a solar home is covered in the buyer tactics guide.

One thing genuinely does get easier

Where an obligation is collected through the property tax bill, a cash buyer avoids the question of whether a lender will permit it to remain in place. That does not make the obligation disappear. It just removes one institution's veto from the conversation.

The economics still have to be priced. An assessment that continues after closing is a cost the buyer will carry, and a cash buyer who did not read the tax bill has agreed to carry it without noticing.

The summary

Cash removes an obstacle and a safeguard at the same time. The obstacle is the one everybody notices.

Ask the questions the lender would have asked, on your own schedule, and take contract questions to your own attorney rather than to the seller. Tariff, interconnection and program terms are set by the utility and by state regulators, they change, and they should be confirmed with those bodies directly.

Start at the solar homes hub, then work through the first questions guide before you write anything.

Anthony Grynchal has been licensed in California since November 2009.