Solar energy saves you money on your utility bills and raises your home’s resale value. In an environmentally friendly and energy efficient housing market, homes with solar panels are viewed as better bargains.
But how exactly do solar panels impact a home’s appraisal? In this blog, we’ll explore how appraisers value solar systems, the differences between owned and leased solar panels, and what homeowners need to know when selling solar-equipped homes
Solar Panels and Home Value: What the Data Shows
Numerous studies have shown that homes with solar panels generally sell for more than comparable homes without them. In fact, a 2019 study by the U.S. Department of Energy found that homes with solar energy systems sold for 4.1% more on average than those without.
- Example: If your home is worth $300,000, solar panels could increase its value by $12,300 or more.
The value increase depends on a variety of factors, including:
- The age and condition of the solar system
- The location of your home (some areas have stronger solar adoption and higher demand)
- The size of your solar system and its energy production
What Appraisers Look For When Valuing Solar Panels
When a home with solar panels is appraised, the appraiser will consider the value of the system and how it contributes to the overall home value. Appraisers typically use a cost-benefit approach, evaluating factors like:
- Installation cost: How much was spent on the system
- System age: Older systems may not add as much value as newer ones
- Energy savings: The cost savings generated by the solar panels over time
Appraisers will also consider whether the system is owned or leased, which we’ll dive into next.
Owned vs. Leased Solar Panels: The Differences
One of the most important factors influencing how solar panels affect a home’s resale value is whether the system is owned or leased.
- Owned Solar Panels: If you own the system outright, it’s seen as an asset, and the value will be directly added to your home’s appraisal. The appraiser will look at the installation cost and the potential energy savings when determining the increase in home value.
- Leased Solar Panels: If the system is leased (or financed), the situation is different. Buyers will be required to assume the lease or buy out the contract, which can complicate the sale. Since you don’t technically own the system, it’s typically not considered an asset when appraising your home. This means it may not contribute as much to the home’s value.
If you’re considering selling your home in the future, it’s better to own your solar system rather than lease it, as this can simplify the sale process and maximize your home’s resale value.
The Impact of Solar on Buyer Perception
More homebuyers are prioritizing energy efficiency and sustainability in their search for homes. Solar panels are an attractive feature for environmentally-conscious buyers who want to save on energy bills and reduce their carbon footprint.
- Market Demand: Homes with solar systems are often more attractive to millennial buyers and first-time homebuyers, who are typically more open to green technology and long-term savings.
- Energy Savings Appeal: Buyers are drawn to the idea of lower utility bills, and solar panels are seen as an investment in future savings, often leading to quicker sales and fewer days on the market.
Tips for Selling a Solar-Equipped Home
If you’re planning to sell your home and it has solar panels, here are some tips to make the process smoother and ensure you get the most value:
- Get Your System Appraised: Have a professional appraisal of the solar system done separately, so buyers can see the full value it adds to your home.
- Provide Documentation: Buyers will want to know how the system works, how much energy it produces, and how much it saves on energy costs. Provide a history of energy savings, warranties, and system details.
- Highlight Financing or Lease Options: If the system is leased or financed, make sure buyers understand the terms and any remaining obligations. Clarifying this can prevent delays in the sale process.
The Future of Solar and Home Appraisal Values
As solar energy gains prevalence, the trend of rising property values for solar-powered houses likely will persist. Indeed, most experts in the industry forecast solar panels to become the norm in brand-new homes in the near future.
This means that homes with solar energy systems will likely continue to appreciate in value as the demand for sustainable living grows.
Conclusion: Solar Panels Can Improve Your Home’s Value
Whether you are purchasing or selling, solar panels bring with them a definite monetary advantage. Not only do they save you money on energy, but they add to the resale value of your home, particularly if you actually own the system outright.
More and more homebuyers are seeking energy-efficient sustainable homes, and solar power is rapidly becoming an integral part of the American housing market.
If you’re thinking about going solar, Lucent Energy can help you navigate the process and ensure that your solar system adds maximum value to your home.
FAQ: Solar Energy and Home Appraisal
In most cases, yes. Homes with owned solar systems tend to sell for more, as they offer future energy savings and environmental benefits.
Yes, but it may complicate the process. The new buyer would either need to take over the lease or purchase the system, which may be an added hurdle.
On average, solar panels can increase home value by 4–5%, but this can vary based on factors like location, system size, and energy savings.
If you plan to sell in the next few years, owning your solar system is a smart investment. It can add significant value and appeal to buyers looking for energy-efficient homes.
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