Discover Whether Solar Panels Will Increase The Value Of Your House
- Columbia University Graduate School of Journalism
- University of California, Santa Cruz
- Western New Mexico University
Within the past decade, more and more prospective buyers are willing to pay a premium for homes with photovoltaic panels. The energy cost savings associated with solar, as well as the growing interest in environmental sustainability, are among the reasons why.
But the size of that premiumand potential energy savings generated by a home solar systemvaries considerably by location. To understand how solar panels increase home value, there are several factors that must be considered.
Factors That Influence Home Value
Why are many prospective homebuyers willing to pay a considerable premium for homes with pre-installed solar panels? Theres no single explanation. Certainly as residential solar becomes more common, buyers increasingly view it as an upgradea home improvement likely to generate revenue in the long run.
Will Adding Solar Panels Increase My Property Value
When you are buying or selling a property, the value of that property is a big deal. Not only do you need to know what to ask for a selling price, or what price to offer, but you also need to know the value so you can secure financing. And the lender also wants to know the value. So what happens when that property happens to have a solar system on its roof or on the ground? How does that impact the property value? The seller, the buyer and the financier all need an answer to this question.
Solar energy continues to grow in popularity all over the US. In November 2017, there were 1.4 million residential systems installed in the US, and as seen in the chart below from GTM Research, the growth is projected to at least double over the next 5 years. In addition to the growth of the residential market, businesses also continue to invest in solar. This rise in popularity will continue to make assessing the value of solar a hot topic.
Chart from GTM Research – www.greentechmedia.com
Typically the companies selling and installing solar may not be the best to assess the value of an installed system. It would seem property appraisers are more suited to address market values. However many of them are just beginning to or still learning about the value of renewable energy like solar. It’s important for installers like us to help accelerate that education process. So, let’s jump into it!
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Potential Problems Selling A House With Solar Panels
While its likely that solar panels will be an asset to your homes sale, its also possible that youll run into some complications, specifically with leased solar panels. Here are some things to be aware of:
You might need to buy out the lease, first. If youre worried about would-be homeowners feeling nervous about your solar contract, the smart path might be to pay off the rest of the lease before you sell the property. This reduces the new owners responsibility and allows you to transfer your panels outright.
You can transfer solar leases. If youre not willing to pay off the lease and you find a buyer who is ready to take it over, the next step is to transfer it into their name. This is a simple process, although it requires the cooperation of both the buyer and the seller.
Your new buyer will need to meet some credit requirements. If youre planning to transfer your solar lease to a new buyer, theyll need to meet specific credit requirements set by your third-party solar installer. While this isnt usually an issue, it can be a problem for buyers with low credit scores.
Youll want to maintain your panels before you sell. If your panels need any routine maintenance, carry this out before you sell your property. This makes them more attractive and accessible to new homeowners.
What You Need To Know About Buying A Home With Solar Panels
If you consider buying a home with solar panels, make sure you get clear, accurate information on the system involved.
As a buyer, you want to know all the relevant facts about the system you are considering including when it was installed, by which company, how much power it produces, what percentage of the homes power does it provide, maintenance history, and more.
When purchasing a home with solar panels, make sure you learn about the warranty.
Two kinds of solar system warranties are normally offered. The first one is the manufacturers warranty with covers the panel and inverter. The panels warranty is typically 20-25 years and 5-10 years for the inverters.
Whoever is installing the system should also offer a warranty on the installation, which means ensuring they have made no holes in your roof that lead to leaks for a specified period usually 2 to 5 years.
Keep in mind that neither of these warranties covers fire, theft, or other damage, so ensure you get the system added to your homeowner policy.
The technology with solar panels is getting better and better. Do your research and understand exactly what you are going to get.
As a seller, you want to have all this information at the ready for when a buyer or a Realtor asks for it. Accurate records and information will make everyone feel better about the transaction.
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Solar Panels Are Unlikely To Be A Deciding Factor
Solar panels are unlikely to be a deciding factor in peoples purchase of the property at this stage in the game.
Very few home buyers know enough about solar, know about how much money they are going to save, how it works with the whole grid system and when you are selling panel back to the grid and all of that sort of stuff.
So there dont know enough about it to be able to quantify it and add value to it. So solar isnt going to add more than it is actually costing you.
Just like your pool, do solar for personal reasons not necessarily for financial reasons in terms of capital gain or in terms of selling your property but obviously for personal reasons there is added benefit that they are green so you feel better and you sleep better at night but you are also saving money on your electricity bills.
If you are looking to put a solar on your house then assess it from a personal stand point and financial stand point and the terms of how it works for you rather than looking and saying Oh if I set solar it is going to increase my equity by x dollars.
If you need more information then go ahead and speak to your local real estate agent who knows the market, who sells properties day and day out because they will know whether or not it is likely to increase the value or not .
Can A House Run On Solar Power Alone
Practically, it is not often possible. This is because solar only works when the sun is shining – which means when it is cloudy or nighttime, they do not generate electricity. There are some battery solutions to provide power during these times, but they still tend to be quite expensive. Most homes with solar panels still rely on the grid from time to time.
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Final Note: How Solar Panels Affect Your Homes Value
Solar panels are a great way to increase the value of your home in an environmentally friendly way. A number of studies have proved this to be true. While the upfront costs may be high, you will see your homes worth rise. Its important to find a solar dealer who will install the most aesthetically pleasing solar arrays possible. An installer who is also licensed as a roofer and electrician can run electrical conduit through the attic, relocate roof vents, and take other measures to make sure that when your house eventually goes on the market, solar will be seen as a great enhancement to your property.
Do Solar Panels Increase Home Value Everywhere
While the average U.S. home saw a 4.1% gain in value, that boost varies from place to place.
Of the metropolitan areas included in the analysis , homeowners who stand to gain the most from solar panel installation include those New York , San Francisco and Orlando, Fla., , according to the study.
While the value of solar panels varies from place to place, no metropolitan area saw home values drop due to solar panels, according to Zillow.
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How Much Do Solar Panels Increase Home Value
Youre probably here because youre curious about how much more your home could be worth with solar installed on it. Weve got you covered.
We completed research on how homes are valued with energy upgrades like home solar panels. We found several sources of solid information on the subject and compiled them here. You may also be curious how to compute a rough estimate of your home value increase, so we crafted an easy-to-use guide, as well.
In this article, well review solar and home sale studies from around the country, provide home value calculation examples, and review valuation factors which affect the value of solar homes most.
Faq: Do Solar Panels Increase Home Value
Do solar panels hurt the resale value of your home?
Generally speaking, the opposite is true installing a home solar array actually increases the resale value of a home, particularly if you have a high-efficiency system that helps lower monthly energy bills.
Solar literacy in your local community is an important factor here, but for most homeowners, the answer to this question will be a resounding no. Multiple studies have shown that buyers are looking for more energy-efficient homes to reduce their carbon footprints and help save on electricity bills.
Do bigger solar installations present a better value-add than smaller systems?
Bigger solar installations may present a better value-add than smaller systems. However, in many cases, it’s not the number of panels that matters so much as the power output. A smaller system, assembled with the most efficient solar panels can be just as impactful as a larger, lower-efficiency system.
The aesthetics of the system may also be a factor, with many buyers actually preferring smaller, less conspicuous systems.
How much value does solar add to the home?
A few studies have shown that solar installations increase a home’s resale value by up to $6,000 for each kilowatt of solar panels installed, or by about 4.1% of the home’s value. However, this can vary quite a bit from one geographic location to the next, even for comparable homes with similar solar panel systems.
Do you really save money with solar panels?
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Do Solar Panels Add Value To Your Home The Verdict
There are both pros and cons of having solar panels when it comes to the potential impact on the value of your property. This makes it hard to definitively answer the question do solar panels add value to your home?.
If you have a relatively new system, with several years lifespan left on the panels, and you have full ownership of both the panels and the Feed in Tariff, then the panels shouldnt decrease the value of your home. This is because the negatives will be balanced out by the positives.
Whether they add much value is debatable. A lot will depend on the area you are in, as to how desirable renewable energy in the home is. If most of your neighbours have solar panels, a keeping up with the Joneses effect may come in and mean that solar panels are a must-have for any new owners.
Therefore, if you are still deciding whether to add solar panels to your home, our advice would be to do it, but only if you plan on living there for the next 10-15 years. In this time, your savings will probably outweigh your costs. Plus, solar panels are becoming more and more common, and so in 10-15 years time, their effect on property prices may have changed.
If you were thinking of installing solar panels purely to increase the value of your property, think again. Its highly unlikely that youll recover the costs of installation, simply from an increase in the value of your home.
Solar Panels May Appeal To Some Buyers
Solar panels may appeal to some green buyers and there are some buyers out there who will look at solar panels and who will think Well okay, thats going to add a bit of cost savings.
But it is more likely to put your house above similar properties in the same price range rather than shoot the value up.
Imagine that there are two properties of $400,000 and they are pretty much exactly the same but one has solar power and the other one doesnt. People might look at one for $400,000 with solar panels over the one without but they are not going to say Weve got two houses that are the same but one has solar panels so now thats worth an extra $50,000!
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A Win For Landlords And A Win For Renters
Renters have also indicated that they are willing to pay more for rentals with solar installed little surprise when you consider the direct savings on their energy bills. Therefore, landlords looking to increase the value of their investment property can benefit greatly from installing solar panels. Not only can they charge more in rent, but the appeal of solar for renters means your property is more likely to be rented out all the time. All landlords will recognise the value in that.
Some states currently offer rebates specifically for landlords. For example, Victorias Solar for Rentals program offers eligible rental providers a rebate of up to $1,400 for the installation of solar panels on their property. Eligible landlords can also apply for an interest-free loan of up to $1,400 to further reduce the upfront cost of the solar panel system.
Other Benefits Of Solar Power
While solar power will certainly save money and energy around your home, there are other advantages as well. A solar energy system will absorb clean, pure energy from the sun.
Installing solar panels on your home helps reduce greenhouse gas emissions that harm our environment. Adding solar will reduce the carbon footprint and help lessen our collective dependence on fossil fuels. When fossil fuels are burned to produce energy, they create toxic gasses that are the primary cause of pollution and potential global warming.
According to The Union of Concerned Scientists, coal and natural gas plants air and water pollution are linked to breathing problems, neurological damage, heart attacks, and cancer.
So installing solar panels should not just be about whether they increase home values. They help the environment and save energy both excellent things.
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Saving Time And Money
Another reason to invest in solar before you put it on the market: Houses with solar panels tend to sell faster than those without solar panels. Research by NREL has found that homes with solar panels sell 20 percent faster than equivalent houses that are dependent on the grid.
The less time your home is on the market, the more money you can save on storage, transportation costs, and having to pay two mortgages at the same time. You also reduce the likelihood that you will have to delist your house or settle for below the asking price.
Do Solar Panels Increase Property Value Heres The Whole Truth
Kim Dinan is a writer, journalist and author. She’s the outdoor news editor at Blue Ridge Outdoors and writes regularly for her local paper in Asheville, NC, covering everything from the necessity of home inspections to trends in the local economy. Kim is also the author of “The Yellow Envelope,” a memoir about the time she sold her house and traveled around the globe.
At HomeLight, our vision is a world where every real estate transaction is simple, certain, and satisfying. Therefore, we promote strict editorial integrity in each of our posts.
As a homeowner, youve probably got a list a mile long of improvements you want to make to your house. If your electric bill is high or if you just want to do something positive for the environment you may have considered adding solar panels to that list.
There are lots of benefits to solar energy, and its a nice thought to produce your own power without relying on the grid. Like any home improvement project, though, its important to think long-term before making a large financial investment in your home.
So, lets cut to the chase. Do solar panels increase your property value?
The Office of Energy Efficiency and Renewable Energy says that a solar energy system will likely increase your homes value, and that buyers across the country have been willing to pay a premium of approximately $15,000 for a home with an average-sized solar array.
Lets dive a little deeper into solar panel options, to see where that value may lie.
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How Solar Panels Could Add Value To Your Home:
It may not be surprising, but, the main reason solar panels could add value to your home is probably the same reason you got them installed in the first place. Cheaper energy.
Everyone wants to find ways to save on their energy bills. The requirement for properties listed for sale to have an Energy Performance Certificate , makes energy efficiency a key consideration for many people.
By having solar panels, youll gain a better score on your EPC and your property will become more attractive to buyers. Not only that, theyll get the benefits immediately without any of the cost or hassle of installing them.
For this reason, it seems like a no-brainer. Having solar panels adds value to your house, right? Well, possibly, but its not quite as clear-cut as that.