Pro Tip For Selling And Listing Your Home
If you invest in solar, the value of your home should increase. Although solar panels are an asset for the vast majority of homeowners when they list the house, a few caveats apply.
First, the solar panels need to be owned, not leased. Buyers are enthusiastic about solar, but they donât want to be locked in to the previous homeownerâs contract.
Second, you need to hire a qualified listing agent to handle the sale. Qualified agents will have taken the National Association of Realtors course Selling the Sun: Establishing Value for Solar Homes. This and other programs enable real estate agents to accurately determine the value of a home with a solar energy system and market it effectively to prospective buyers.
Your agent or realtor can work with the buyer to ensure they hire an appraiser who knows solar as well. Tools such as PV ValueÂ® are used by agents and appraisers alike to calculate the line item addition to the homeâs value that solar panels and other upgrades provide.
Without specialized knowledge, tools, and training, the sale of your home will be in the hands of inexperienced agents and standard bank appraisers who donât understand the full value that solar adds to a house. You may be forced to sell your home for less than market value if you donât have the right partners.
Should You Buy Or Lease
Your financial goals are likely a primary factor in going solar and may impact whether you buy or lease an installation. If you purchase a new home solar system, future proceeds from an increased sale price will go directly to you.
A solar installation can only be included in a property assessment if it is owned by the homeowner and is an asset that can be transferred without obligation. The systems warranties and performance guarantees generally transfer with the sale.12,13
To secure a higher sale price, its most advantageous to buy a solar energy system for your home.11 However, if you decide that a lease or Power Purchasing Agreement is more appropriate, there will be less recouped from the home sale.
Appraisers and lenders consider that if a homeowner installs a residential solar system through a lease or PPA, it is essentially the asset of a third-party owner. This requires the third-party to be involved in the property transfer.12 Sunruns experienced Service Transfer Specialists make it easy to transfer your solar lease agreement to the new owners. Learn more.
Do Solar Panels Increase The Value Of Your Home
Renovations to your home are a great way to increase its value. Certain upgrades, like remodeled bathrooms, kitchens, and basements, increase property value more than other renovations. To determine whether installing solar energy features in your home will boost its value, its important to understand what your homes value means.
In simple terms, the value of a house is the amount of money a prospective buyer is willing to pay for it. A homes estimated value is based on several factors, all of which make the home more enticing to buyers and cause them to pay a premium for purchasing it. These factors include location, size, and features that a large percentage of buyers are looking for in their new home.
Zillows Senior Economist, Sarah Mikhitarian, referenced the growing concern for climate issues and other environmental dangers in the housing market. There is increased demand for green living,she told CNBC. More than 80% of buyers now say energy-efficient features are important in selecting their home.
Solar panels, among other green home upgrades, have become a sought-after feature in many housing markets around the country, which means that its a feature that will increase your homes value.
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Are Solar Panels A Good Investment For Your Home
The answer to this question depends on a lot of factors, such as the size and quality of your home. For example:
If you own an average-sized house with little maintenance required solar panels could be worth it!
On the other hand, if you live somewhere expensive but dont have much space for solar panels, they probably wont be a good investment.
In addition, you should think about whether or not the solar system will stand out from everything else on your roof!
This is important because people who arent interested in green energy may choose to buy another house if yours has an unattractive solar panel installation.
If youre on a budget, you might not want to invest in solar panels.
What Does This Mean For Property Values
All of this growth is important for your house value because of awareness: the more people know about the benefits of solar, the more likely it is that prospective home buyers see your photovoltaic system as a positive addition. The environmental benefits are a big win of course, but for most people solar provides a clear financial benefit that fully pays you back after less than 10 years. After that, youâre essentially getting free electricity.
Free electricity for decades. Hard to argue against the value of that.
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Use Our Home Solar Calculator To Help You Estimate Home Value Increases
To quickly and accurately calculate how much solar you do need, we recommend using our solar calculator. That information, combined with the formulas above can also help you quickly estimate your expected property value increase with solar.
In the section below, we provide an example of how to create a ballpark estimate of the value of your home with solar panels installed using our calculator and the above formulas.
Our calculator takes the following factors into account in order to give you an accurate estimate of your installation costs and solar savings:
- Your available roof space
- Your utility company electricity rates
- Available solar incentives
In our example, we use Zillow as well, to help you get a gauge on your initial real estate value without solar.
When you enter your address into a search engine like Google, youll quickly find a Zillow link to your property. On that page is a listed Zestimate value, or the amount your home would probably sell to a new owner for based on sale data from similar types of homes.
Find out how much a rooftop solar system will cost you
Studies Linking Solar Panels To Home Value Increases
The Appraisal Journal cited researchers Ruth Johnson and David Kaserman who report, Home value increases of about $20 for every dollar saved on annual energy costs.
So, in the case of the $200 monthly savings example above, you could expect the value of that solar home to be worth $48,000more than it was previously .
For a second example,a study by the Lawrence Berkeley National Laboratory yields a formula of a $5,000 resale value increase for every kilowatt of solar installed. To get that same $48,000 home value increase from the Appraisers Journal with this calculation, youd need a 9.6kW system .
With average installation costs around $3,500 per kW upfront, you could have this size system installed for $33,600. That difference in value gained relative to your investment potentially nets you an arbitrage opportunity of $1,500 per kW of installed solar.
That doesnt even include the federal investment tax credit, which allows you to recover 26% of the cost of your home solar installation. Additionally, in some states, your property value increase is even exempt from additional property taxes.
If youre looking to sell your home faster and at a premium, it might be worth having solar installed first! You can expect a quick return on investment for this type of clean energy home improvement.
While that estimate is simple, theres a lot of unaccounted for variables. For example, it doesnt take into account the size of the solar energy system.
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What Factors Influence The Value Of Solar Panels
Although solar panels are becoming much more popular among homeowners, the benefits of solar technology are still being explored. Whether or not a solar panel installation will increase your home value will depend on:
- what region of the country your home is located
- local price of electricity
- frequency of power outages in your area
- local understanding of solar technology & benefits
Taking all this into consideration, its important to do your research before moving forward with long-term solar installations. This is especially true for sellers looking to install solar panels with the primary goal of increasing property value.
Factors Affecting The Solar Panels Value
Before you decide to install solar panels on your house, its important to consider what factors will affect the value of your home.
This is because each property in a given area has different characteristics that investors are looking for when buying homes.
For example, if there are several old houses with less attractive roofs right next door to yours and they all have solar panels, your home might not be as attractive to potential buyers.
Here are some factors that can influence the value of solar panels on a given property:
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The Price Premium From Your Solar Panels Will Go Down Over Time
No matter what improvements you make to your home, whether itâs a new roof, a renovated kitchen, or solar panels, the value of that investment will go down over time. Roofs wear out, kitchens go out of style, and when it comes to solar panels, they slowly degrade over the decades and will eventually need replacement.
In the case of solar, that investment may continue working well beyond even the typical warranty period of 25 years, and could continue to provide free electricity for more than 30 years before a major system component needs replacement.
Nonetheless, panels do lose efficiency over time. For a panel purchased today, expect about 0.5% less electricity production every year.
In addition, the cost of solar will continue to go down over time, and technology will continue to improve. That means that your solar panels that are cutting edge today may seem competely obsolete and inefficient to a home buyer looking at your house 20 years from now. And 20 years from now, if price trends continue, who knows how inexpensive solar might become.
All in all, this means that $4 per watt premium that you get today will be less in future decades. But if youâre holding onto your house that long, your solar investment should have already paid for itself in lower electricity costs.
Can Solar Panels Improve Your Home’s Value An Faq For Home Owners
Postedby Dave Kotleron Tuesday, March 22nd, 2022 at 10:17am.
Solar panels are becoming increasingly popular because they help homeowners save money and also help homeowners reduce their home’s carbon footprint. Despite this rising popularity, many homeowners are unaware of the benefits of solar panels and are uncertain about how solar panels work. This FAQ can help answer homeowner questions about solar panels.
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Cost Of The Solar System
Though prices may be dropping, the cost of your solar system will vary depending on the type of system you choose, the size of your system, and your location. Some states have rebates and incentives that reduce the overall cost of solar electricity systems.
In general, the National Renewable Energy Laboratory says a 2-kilowatt system, which should offset the electricity use of an average-sized home, will cost about $8 to $10 per square foot before state and federal rebates and incentives.
Solar panels dont require much maintenance, aside from an occasional cleaning. The price of cleaning should run between $150 and $330, and cleaning should be done on an as-needed basis.
Providing regular cleaning and maintenance to your solar panels may be required if you lease your panels or to keep your warranty current. Read the fine print in your agreement, so youll know if cleaning and maintenance is required .
The EPA offers tax credits to homeowners who install solar energy systems. Until the end of 2019, that tax credit was 30% of the total cost of your solar system. Beginning in 2020, however, the percentage begins to step down. By the end of 2021, the credit disappears completely.
If you install your solar panels in time to receive the tax credit, you can choose to either deduct the tax credit directly from your tax payment if you owe federal taxes, or deducted it from your taxable income when you file your taxes.
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.
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Solar Panels Increase Property Value
Lets start with a thought experiment. Say you were thinking about purchasing one of two identical homes, right next to each other on the same street. The only difference is that one of them has enough rooftop solar power installed on it to completely eliminate a $200 monthly power bill. The other has an empty rooftop.
Thats $2,400 a year in savings when buying the solar home instead of the one next door. Not only do you save big on electricity every year, youre also reducing your carbon footprint and avoiding the impact of future utility rate increases by producing your own power.
Logically, itd make sense that the solar homes value would be significantly higher than the home without solar panels. But, the question is, how much more?
The exact answer depends on a few factors we outline in the next section, but well cover three studies which help get us to a ballpark range you can feel comfortable with first.
Owning Vs Leasing Matters
While this might not be at all obvious to the unsuspecting homeowner, theres a big difference between owning and leasing your solar panels especially when its time to sell the home later on. Were guessing the solar company mightve left this detail out, as they like to say leasing is one of the cheapest and easiest ways to acquire a solar package but the truth of the matter is that if you did lease your solar package , this complicates selling your home quite a bit.
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Does Leasing A Solar System Impact The Home Sales Process
Selling a house with a leased PV system can be a bit more difficult for the homeowner. The Zillow and Lawrence Berkeley National Laboratory studies examine properties where the solar system is owned, not leased. Although owning a solar array is a home improvement, solar leasing arrangements are different because homeowners actually rent equipment. This means that the new homeowner may be asked to take over the solar lease payments.
The terms of solar leases vary by the installer, but some homeowners may need to buy themselves out of the contract if they cannot find a home buyer that will take over the lease contract. In this case, this expense could eat into the potential profits of selling the home. To take over the solar lease, the new homeowner may need to meet credit requirements, and not all home shoppers will qualify.
Homeowners Who Made The Solar Switch
Lisa and Jerry Chretien, a couple from Cape May County, New Jersey, decided to lease solar rooftop panels from Sunrun a year ago. High utility bills and the desire to live cleaner and greener lives inspired them to make the decision. Since going solar in June 2018, the Chretien’s electric bills have decreased, especially in the summertime.
“As soon as we would open the pool and turn on the air conditioners in May our electric bills would run close to $800, sometimes more,” said Lisa Chretien. “Saving money, especially with kids in college, has been a big help and a big saving. And there are a lot of incentives, tax wise you get a break. It has just been a plus all the way around.”
For Kerrie Lane, owner and operator of a cleaning service and resident of South Jersey, the experience was similar. After moving into her new home, she received her first electric bill: a staggering $1,100. Kerrie knew she needed to do something to make her electric bills affordable.
“I’m 60 years old, so I’m getting up there. I do a physical job for a living but I can’t do it forever. … So having my bills being manageable was very important to me,” Lane said. “My first electric bill in this house was $1,100. I knew I needed to correct this situation and make it manageable and Sunrun gave me the consistency that I was looking for. “
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How Much Do Solar Panels Increase The Value Of A Home
Installing solar panels onto your home is a sizable home renovation. Any responsible homeowner would want to know how much of a return on investment they would receive from a solar panel installation.
Solar paneled homes also tend to sell at a faster rate than those without solar panels. The National Renewable Energy Laboratory discovered that homes with solar panels sell 20% faster than similar-sized houses that depend on an energy grid.
NREL research also suggests that solar panels translate into overall better value for your home. The Lab found that every dollar that a solar system saved on energy costs increased home value by $20. This means that an energy system that saves the average homeowner $400 per year, would add a value of $8,000 to your home.
Its important to note that the added value to a solar-powered home is not as cut-and-dried as most homeowners might hope. This is because buyers have differing opinions on whether solar energy is indeed a valuable addition to the home, or if its just an additional cost. The final sale price of a solar-paneled home depends on a variety of factors explored in the following section.