How Solar Panels Can Increase Your Property Value?

Does installing solar panels actually increase your property value? Is it true? How? And how much? Don’t be so fidgety. Read on this blog to find out all your answers and put an end to your curiosity.

We have heard a lot of reasons why homeowners are going solar. Some want to go solar because they are much more affordable now and can help them save big on their utility bills. While some want to install solar energy systems because they care about our planet and are always keen on adopting sustainable practices.

Whereas some just want to stay ahead of the curve and want to invest in ever-changing modern innovation equipment. On the other hand, some want to generate an additional source of passive income by selling extra electricity to utility companies.

Among all these convincing reasons, there is one more factor that entices households to switch to solar. And that is their increasing property value.

That’s true!

According to a report by Zillow, homes with an equipped solar panel system are likely to sell for 4.1% more than homes that don’t have solar panels.

Let’s dig a little deeper and know how exactly installing solar panels adds value to your home and the factors influencing it.

How does installing solar panels increase property value?

Today, climate change is a concerning issue globally. The governments of all the nations are taking proactive measures to reduce carbon emissions. And installing solar panels has been proven to be a significant contributing factor in lowering greenhouse gasses (GHG).

Besides reducing pollutants, it also helps homeowners save a considerable amount of money on their electricity bills in the long run.

Both of these factors cumulatively increase the home’s property value.

As per the report by the National Renewable Energy Laboratory, your property value increases by $20 every time you save $1 on your power bill. For instance, let’s say your solar power system helps you save $500 a year on your energy bill; this means your home value will also increase by $10,000.

Pretty amazing, right?

You would understand its importance if, in the future, you plan to sell your home, says a real estate agent.

In another survey report by Zillow Housing Trends, 67% of households consider in-built energy-saving systems as a potential decision-making factor to consider while purchasing homes.

In fact, according to a study by the U.S. Department of Energy’s Lawrence Berkeley National Laboratory, homeowners are even willing to pay an additional $15,000 or even more for a solar-equipped house. This clearly implies that energy-saving homes are in greater demand in America and thus are expected to sell at greater prices.

Moreover, these increased property values are even higher in certain real estate markets. For instance, New Yorkers are willing to pay an extra $23,000 roughly for solar-equipped homes in comparison to normal homes.

Factors influencing the added value of your home

It’s true that installing solar panels on your property increases your home's value. However, this might not be the case everywhere. There are certain factors that impact the added value of your home, such as the location, local electricity rates, your solar power system condition, the solar market in your state, and ownership rights.

As a vigilant homeowner, it is imperative that you be aware of all these influential factors. Let’s study each of them in detail.

Location

The location of your property significantly impacts the added home value upon solar panel installation. This particularly includes the regional weather and the local electricity rates. If the climate is sunny, then your system would be able to get ample sunlight, which would ensure maximum power production.

Moreover, if you live in a neighborhood that emphasizes environmentally friendly practices, then your solar-equipped home will have more value. For instance, solar panels are in big demand in cities like Los Angeles, New York, or San Diego.

Additionally, it is very obvious that federal, state, and local solar incentive and rebate programs are highly influenced by the region you live in. Thus, it has a direct influence on the PV-installed homes.

Local electricity rates

You need to understand that your home’s added value is not directly impacted by the solar panel installation but by the factors that influence it. One such element is local electricity rates.

Going solar will be most fruitful in the regions that are burying homeowners with overwhelming electricity rates. According to the U.S. Energy Information Administration (EIA) report, the average residential power bill is $117.46 monthly. So, check your electricity bill and see if it is below average or higher than that.

If it is less, then switching to solar won’t be able to save you much. But if the case is reversed, then installing panels on your property would help you have potential savings on your hefty bills. And thus, eventually, it will add greater value to your property. States like California, Hawaii, Connecticut, or Massachusetts top the chart for average electric rates.

Solar panel system condition

Homes that are equipped with the latest solar power systems are considered to be a greater asset than the older ones. Let us understand why.

Usually, a residential solar panel system has an average life of 20–25 years with the same period of warranty. So, if your system is already 10–15 years old at the time of sale, this means it will only last for the next decade. After that, it will require paid servicing or maintenance, adding an additional expense to the pocket of the new buyer.

On the other hand, if your PV system is brand new or less than 5 years old, then it would serve a longer period for your potential buyer. Thus, he will add more savings and more value to his life. So, consider this aging factor when you are planning to sell your property.

Moreover, it is your basic duty to keep your system up-to-date in order to maximize your home sale returns. So check and spot if there is any defect or technical error and have them repaired under your warranty period.

Additionally, check the Types of Solar Panels used in your system. The better the panels, the higher the power production capacity. Also, check the necessary documentation and paperwork.

All these things would be taken into account at the time of sale and would impact your home's selling value. So, better be prepared in advance.

Solar Panel Ownership

If you really want your solar panels to add greater value to your property, you need to understand the importance of the right solar financing option.

For instance, let’s say you want to sell your home in the following year. For that, you need to own the property outright, including the solar panel installation, so as to avoid any future conflicts with the buyer. If you don’t legally own the PV system, it could create an obstacle to finalizing the deal.

On the other hand, if you own the system and are selling your home, you can simply transfer the solar ownership to the prospective buyer in the middle of the contract. And thus, allowing them to utilize the remaining service period. Also, this won’t incur any additional charges. The only thing that will be required is that the new homeowner must be solar eligible, such as their credit check.

Next, outfighting the solar system further helps you avail of federal, state, and local solar incentives. Using solar services on a lease, power purchase agreement (PPA), or solar loan does not give you the right to utilize incentives.

In both scenarios, buying out the solar panel system entirely will be beneficial for you and add more market value to your property in the future.

Does a larger solar panel installation mean increased property value?

So far, there has been no correlation found between the size of your solar system installed and its direct influence on your increased property value. The higher power production does not guarantee you larger profits.

There could be a scenario where your prospective buyer has a power bill below the stated nation’s average residential electricity bill.

So, don’t fool yourself by thinking that a bigger solar system means a bigger home value. Instead, for solar panel installation, select the size that fulfills your home energy needs.

Does installing solar panels also influence my property taxes?

As you already know, installing solar panels on your property increases your home value. This means that the higher the home value, the higher the property taxes will be. This is obvious. However, this is not a universal law in the United States.

According to the SEIA report, 36 states have 100% exempted solar homeowners from property tax, including New Jersey, Nevada, and more. On the other hand, some states have exempted the taxes for a definite number of years.

So, check all the state regulations and guidelines before you make a final decision.

Wrapping-Up

So, that is all about the impact of solar panel installation on increased property value.

Going solar helps you achieve long-term savings by reducing carbon footprints and increasing the value of your home in the future. How much your property value will increase entirely depends on your residential location, your power bills, solar system condition, ownership rights, and the regional electricity rates.

Homeowners who are looking to sell their home should keep their system well maintained and well documented. Those who are planning to go solar and considering this valuable factor in their decision-making should choose the system that fulfills their needs.

Having said that, we hope you find this blog useful.

Upma is the Seo Executive at JoomDev. She loves to convert her ideas into reality by developing products to make your online business success with her WordPress plugins and Android app development company.