Do Solar Panels Increase Home Value?
Solar panels are capable of increasing your home value alongside reducing your carbon footprint and lowering energy costs. With a growing demand for energy-efficient homes on the real estate market, solar panels can boost your home’s value while providing sustainable and renewable energy to meet your demands.
The Value-Boosting Effect of Solar Panels
- Solar Panels as an Attractive Selling Point: Energy saving features on a home are appealing to environmentally conscious homebuyers. Buyers are willing to pay more for a home with a solar energy system than for other comparable homes. According to the 2021 Zillow Group Consumer Housing Trends Report, 67% of potential home buyers ranked energy efficiency as a “very to extremely important” feature for a home.
- Increased Property Value: If you are looking to sell your home, a solar energy system will result in an increased asking price. Research initiatives by the Appraisal Journal indicate that your home value increases $20 for every $1 reduction in your annual energy bills. For example, if your solar energy system saves you $400 a year, your home value experiences an $8,000 increase.
Factors Influencing the Value Increase
- Energy Cost Savings: A solar energy system, whether it is a grid-tied system or incorporates battery storage, offers energy cost savings overtime that may be appealing to a buyer. Lowered utility costs can increase buyer interest and allow for increased resale price of your home.
- Environmental Considerations: Environmentally conscious buyers are more likely to purchase an energy efficient home than a comparable home. Solar panels on your home help reduce your carbon footprint which is a viable selling point for buyers.
Assessing the Value Added by Solar Panels
- Appraisal and Valuation Methods: Home appraisers have found that solar panels increase the market value of your home when selling. Working with appraisers that are familiar with solar energy systems can guarantee that your home is adequately priced.
- Resale Value vs. Return on Investment (ROI): Resale value of homes with solar energy systems are boosted in certain housing markets. For example, buyers in New York will pay an additional $23,989 for a solar home versus a comparable home. Return on investment is also influenced by factors such as location, system health as well as state and local policies. Your ROI will be higher when buying a home with solar panels as you will not be paying for the initial investment.
Communicating the Solar Panel Investment to Potential Buyers
- Effective Marketing and Listing Strategies: If you are looking to sell a home with a solar energy system, your sale price will be higher than that of a comparable home without a solar energy system. Marketing your home’s solar energy system in its listing will allow you to profit from an increased resale value while the buyer benefits from an energy efficient home
- Transferability and Lease Agreements: Only homeowners who have purchased their solar systems outright, legally own the system. If you do not own the system and financed it through a solar lease, transferability may become complicated. In this case, you must buy out the lease or transfer it to the new home owner in order to sell your home. Buying out the lease may result in substantial payment depending on the timeline of the lease. Transferring the lease would allow the new owner to take over the remaining time on the contract, but certain requirements may slow the selling process. When inheriting a solar system, you should take into consideration the age of the system as solar systems have a lifetime of about 25-30 years.
Thanks to their long-term energy savings, solar panels increase home value as well as increase interest from home buyers. Environmentally conscious buyers and the desire for energy independence can secure your home’s value and generate a higher selling price with the growing demand for energy efficient homes.