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Solar Resources

How Solar Panels Affect Property Values and Home Sales

Solar panels—are they a dream feature or a tough sell? Turns out, solar can do a lot for you when you go to sell your home. Surveys show that interest in green features is growing among homebuyers, and when you opt to install solar panels on your home, that can translate into higher sale prices, faster turnaround, and a better valuation. Still, you have to be careful when you’re choosing how you buy—a lease could potentially cause additional complications during the sales process.

Here’s the 411 on how solar can influence your home’s value—today, and in the future, as well.

solar panels on green house

Table of Contents

The Green Movement in Homebuying

Green is in right now—and we don’t just mean when it comes to your closet. Consumer surveys show that buyers are highly influenced by terms like “energy-efficient” and a hefty 61 percent of those asked said solar energy systems were either desirable or essential when they looked at homes.

Millennials, in particular, seem drawn to green features. They like smaller, efficient homes with energy-friendly features like better HVAC systems. Solar energy systems definitely fit that bill. In fact, according to a number of studies, solar increasingly adds to the sale price of homes that have it—and turns them around faster on the market, too.

Research Confirms: Solar Installations Increase Home Values

Multiple studies show that solar increases home sale prices. In most cases, the value went up by several thousand dollars. For instance, research coming out of the Lawrence Berkeley Laboratory showed an average addition of $15,000 to homes with solar installations. They also looked at how that premium broke down by solar capacity and found that every watt of solar adds about $3.00 to $4.00 to a home’s sale price. Given that the average size solar energy system is about 5 kilowatts—or, in other words, 5,000 watts—that’s an add-on of anywhere from $15,000 to $20,000.

Economists who looked at homes for sale in southern California found much the same thing. They studied how home values changed after solar was installed, and noticed a 3.8 percent premium tacked on to sale prices after solar arrays went live. In that part of the country, that translated to about $20,194—that’s quite a jump!

Some Factors That Can Affect Property Values for Solar Homes

Different markets may be more or less favorable to solar homes, of course. One thing that vastly influences its popularity are regional variations in the price of electricity. The effect is just what you’d expect: areas with high utility bills tend to draw more beneficial sale prices for solar homes.

Additionally, the political attitudes of a region can affect solar premiums as well. For instance, home in locations that swing toward the left—especially on environmental issues—get higher marks for sale prices on solar homes.

Avoiding Increased Property Taxes for Your Solar Energy System

While solar panels add value to your property, they won’t necessarily drive up your property taxes. As an incentive to install solar, many local governments exempt solar homeowners from paying any additional property taxes associated with their array. However, that amount is still added to your valuation, so you get all the benefit of increased property values without paying the price.

If you’re looking to install solar to add to your property value, it’s not a bad idea to investigate how your local tax assessor handles solar arrays.

Sold sign

Solar Listings Also Spend Less Time on the Market

Trying to move your home fast? If your house has solar installed, selling should be a snap. When the National Renewable Energy Laboratory ran its own case study of San Diego homes, it found that houses with solar panels sold 20 percent faster than comparable non-solar properties.

Local realty companies in Arizona noticed a similar trend. When they analyzed sales trends back in 2014, their data showed that solar moved houses faster. Of course, these studies are both coming out of regions that are pretty amenable to solar—California and Arizona were the number one and two states in the country for capacity in 2016. There’s no thorough data yet to examine how solar affects sale times across the country, but as a highly-desired feature nationwide, you’d expect solar homes to turn over fast, no matter where you are.

But If You’re Thinking of Reselling, Beware Solar Leases

The benefits of solar on your home value apply mainly to households that have purchased their equipment. If you have a lease, your solar equipment could potentially become a major impediment to selling. Anecdotal evidence from realtors seems to suggest that homeowners with solar leases like those offered by SolarCity have a hard time closing the deal when it comes time to sell.

Turning over a solar lease can be a complicated process. Generally, your buyers will have to fill out a separate application—and qualify for credit—to take over your lease. That might not be all that enticing to buyers, so they may ask you to buy out your leasing contract as a stipulation in their offer, meaning an extra $15,000 to $20,000 expense.

Taking over a lease can feel like uncharted territory. Occasionally, the legal details will be downright murky—realtors all say that they’ve seen buyers back out on offers once solar leases came into the discussion. So unless you plan on sticking around for a while—or don’t mind the extra work of negotiating a lease takeover—it’s better to buy your panels outright if you intend to sell your home at some point.

With interest in solar only set to grow, solar panels make a truly smart investment—not only while you stay in your home, but when you go to sell, too!

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