Your Buyer Does Not Want the Panels: A Claremont Seller Guide

The offer arrives and the buyer wants the house. They do not want the solar arrangement.

Sometimes it is stated plainly as a condition. Sometimes it arrives as an inspection response asking for the array to be dealt with. Either way, the seller now has a question that is really about money and timing rather than about equipment.

The first thing to do is separate the two possible objections, because they call for different answers.

Two different objections

OBJECTION ONE IS THE OBLIGATION. The buyer does not want to inherit a payment, a contract, or an entity they now have a relationship with. This is a commercial objection and it is usually reasonable.

OBJECTION TWO IS THE HARDWARE. The buyer does not want the panels themselves, for reasons of appearance, roof condition, planned renovation, or a view that an ageing system is a liability. This is a different objection with a different set of remedies.

Ask which one you are facing. Sellers frequently answer objection one with a solution to objection two, and the deal drifts while everybody talks past each other.

What actually drives the answer

How the system is held. There is no getting around that.

An owned system with no debt behind it is the easy case: there is nothing to assume, and the buyer's objection can only be about the hardware.

An owned system with financing behind it is a payoff question, and payoffs are ordinary escrow business, described in the payoff guide.

A third-party arrangement is the hard case, because the seller cannot unilaterally end something a provider is party to. What is possible is whatever the agreement says is possible, and that has to be read rather than assumed. The reading is set out in the contract guide.

The options, in order of cost

HOLD THE POSITION. If the arrangement is genuinely transferable on ordinary terms, and the buyer's objection is unfamiliarity rather than substance, the answer may simply be information. A clear file, the contract, the production history and a written statement of the transfer process from the provider will resolve a surprising share of these. Assembling that file is the point of the estoppel letter guide.

ADJUST THE PRICE. If the buyer is willing to take the arrangement but wants to be compensated for it, this is an ordinary negotiation about a number. It is frequently the cheapest resolution available, because it involves no third party and no calendar risk.

END THE AGREEMENT. Where the contract permits it, the seller pays to terminate and delivers the house without it. That is real money out of proceeds, and whether it is available at all is a contract question. The shape of it is covered in the buyout guide.

REMOVE THE EQUIPMENT. Slow, expensive, involves a roof afterward, and on a third-party system may not be the seller's decision to make. Rarely the right answer.

TAKE ANOTHER OFFER. Sometimes correct, and it depends entirely on what else is in front of you.

Do the arithmetic before the emotion

Sellers dislike paying to remove something they paid for. That reaction is understandable and it is not analysis.

The comparison to make is between the cost of resolving it and the cost of not resolving it. Not resolving it means going back to market with a known issue, carrying the property longer, and meeting the same objection from the next buyer, who will by then also know the house has been available for a while.

Where the objection is going to recur with every buyer, paying once is usually cheaper than negotiating repeatedly from a weakening position.

Where the objection is idiosyncratic to this buyer, holding may be right.

You cannot tell which is which without knowing how the arrangement is actually structured, which is why the file comes first.

Do this before listing, not during

The whole conversation is easier when the seller has already established, in writing, what the arrangement is and what the transfer process looks like.

A seller who can hand a buyer the agreement, an estoppel letter, the production history and the permit file has pre-answered most objections. A seller who is finding all of that out while responding to a request under time pressure is negotiating badly through no fault of their own.

The pre-listing sequence is set out in the seller playbook, and it is worth running even where the system is owned outright.

What not to do

Do not promise something the provider has not agreed to. A seller cannot bind a third party, and a commitment that depends on somebody else's cooperation is a commitment you may not be able to keep.

Do not describe the financial effect of the solar to a buyer as though it were settled. What a system is worth on a bill depends on tariffs and interconnection terms set by the utility and by state regulators, those change, and the buyer should confirm them with the utility and the California Public Utilities Commission rather than with you.

Do not let the objection go unanswered while you decide. Buyers read silence as a problem.

And whatever you learn while working through this, it goes into the disclosure package, because a seller who has now investigated the arrangement knows more than they did, and disclosure attaches to knowledge. The scope is in the disclosure guide.

Contract questions belong with your own attorney. Start at the solar homes hub for how the rest of the file should be built.

Anthony Grynchal has been licensed in California since November 2009.