I am not sure how many people think of their home as an investment. But that is what is. Your home is more than the place you rest your head at the end of a long day.
Your home can help you financially in many ways, including improving your wealth. But for it to do that, you have to take care of it. The value of a well-cared-for home increases over time.
As homeowners take on home improvement projects, they increase the worth of their property. And there are many little things that you can do around the house to accomplish this. Do solar panels make that list? Will solar panels add value to my home?
Let’s answer this question right away before we get into the hows and whys of it.
Will Solar Panels Add Value To Your Home?
The short answer to this question is yes, installing solar panels will add value to your home.
Any realtor can tell you that adding value to your home and incurring expenses are two very different things. There are a few costly upgrades like extensive landscaping or putting in a swimming pool that homeowners may think are selling features.
But these days, unless you are filthy rich, people live to save money. While you may want these upgrades to have the ‘wow’ effect, potential buyers may see upkeep and the dollar signs that go along with it.
With solar panels, it is different because there is a lot to gain from adding a home-designed energy system. And should you pass it along to the new buyers, they stand to benefit from those gains as well.
The panels will save them money. Their electricity bill will be lower. Plus, if they have an interest in green energy, not having to go through the hassle of putting in the panels themselves is a selling point. There is a high chance you can get top dollar for your home.
Here is a bit of statistics to back this statement up. The National Renewable Energy Laboratory revealed that homes running solar energy sell faster (20%) and for more (17%) than homes without.
So solar panels will add value to your property. They make a superb selling feature for buyers who want to go green and save some money.
How Will Solar Panels Add Value To Your Home
Adding solar panels allows homeowners to save on energy. Each dollar you save on electricity adds about $20 to your home value. So the return on your investment in solar panels is 20:1.
When the time comes to sell your house, those savings equal larger profits.
The Lawrence Berkeley National Laboratory revealed that homeowners who install solar panels add about $5,911 per kilowatt to the value of their home. Of course, this figure is the national average and will vary from home to home. The added value depends a lot on the size and output of your system.
Geography and trends will also play a role in the final figure. But we will look at those in a while.
The figures below are an estimate of the value different size systems will add to a home. But there are some considerations. We will look at those in the next section.
- A 4-kilowatt solar panel system will add a value of $23,644 to your home.
- A 6-kilowatt solar panel system will add a value of $35,466 to your home.
- An 8-kilowatt solar panel system will add a value of $47,288 to your home.
- A 10-kilowatt solar panel system will add a value of $59,110 to your home.
Why Will Solar Panels Add Value To Your Home?
The calculations above give an estimate of the value solar panels add to homes. They are based on the average cost of different solar setup sizes. But several other factors will influence how much your panels will earn you when you sell your house.
The severity of natural disasters in recent times turned the eyes of the world to the effects of global warming. As a result, the call and response toward green living have increased. Many homebuyers in some parts of the country say energy efficiency is a must-have when looking for a home.
In some states, newly built homes must be energy-efficient.
What I’m saying is there is a high demand for green energy. But the demand leans more toward solar panels than other sources of renewable energy. As such, homes outfitted with solar panels are of high value.
Why Are Solar Panels In High Demand
- Solar power is readily available almost everywhere.
- People are more used to the idea of solar energy than other forms.
- Solar energy is the cheapest and quickest alternative form of energy to install.
- Getting power from the sun is easy.
Your Location Influences The Value Added By Solar Panels
The price of electricity in some areas is something that also drives the move toward solar panels. Some places in the country have higher electricity costs than others.
The higher the price of electricity in an area, the more likely home buyers will want to invest in solar. You can expect your solar panels to add some value to your home then.
Places with low monthly electricity costs have a lower demand for other forms of energy. That does not mean that your panels will not add value. But in these places, solar panels as a selling point may be less effective.
Your geography will also affect your sunlight exposure. Solar panels run on power from the sun. Homes with solar panels in places with extreme sunlight tend to do well on the market.
In these areas, solar panels and sunlight hours are an incentive to invest in solar.
But some places experience a shortage of sunlight hours. So homebuyers who want to use an alternative form of energy may choose something other than solar.
Tapping Into Local Trends
In some areas of the country, standing out with solar pays. But, you must know your neighborhood. The response to green energy is not the same everywhere. Solar use is on the rise in many states. Solar panels will add more value to homes in these areas.
In other spots around the country, the move towards solar is not as successful. As much as solar panels add value to the physical structure, you may not see that value translate to cash.
Save Money And Time
Here, the value added by solar panels may not be in the form of cold hard cash in your hand either. It is more about what a quick sale can do for you.
I mentioned earlier that homes with solar panels sell faster. Your house may spend less time on the market.
Less time on the market also means less time spent paying two mortgages. It means less money spent on storage.
A quick sale may not mean that you get the value you were hoping to get from the sale of your home. But, it could add value to your property by saving you money in some places and time in others.
Solar Panel Prices Will Affect The Value Added To Your Home
The going price for solar panels in your area contributes to the value a solar installation adds to your property. The permit process (including cost) and the installation expense are also factors to consider.
Someone looking to buy a home may be influenced to purchase a piece of property with panels already installed. That way, they can avoid the hassle of getting the permits. They can skip looking for suitable panels, designing a system to fit their home, and buying the panels themselves.
How Old Is Your Solar Panel System?
Like every piece of equipment or appliance you own, solar panels have a shelf life. From the moment they leave the store, they suffer wear and tear. The value of the panels begins to depreciate.
Studies show that after about 20 years of service, solar panels become less efficient. But that does not mean they will contribute less to the value of your home.
Buyers with a mind to have solar panels will still appreciate the addition. It’s the same way buyers like a home with an HVAC system, even if it is old. You can still find a premium price for a home with an aging system.
But here are a few things you can do to keep your system working well.
- Take care of your solar panel system. Give you system regular cleaning.
- Perform regular maintenance checks.
- Ensure the system runs smoothly.
- Keep records of the service you do on the system. That way, you can show the buyers that your system is well-cared-for even if it has a few years on its head.
- You can go as far as having the system assessed by a professional.
The Replacement Value Of Solar Panels Affect The Value Added To Your Home
Solar panels have come a long way from when they were first introduced. There have been several upgrades in the design and efficiency of these items.
Now, like any piece of technology, older model parts may be harder to come by. With time, you may no longer be able to find them. These things will reduce the attractiveness of your panels as a selling feature.
Leasing Solar Panels
As a homeowner, you may have leased your solar panels. Or, maybe you got a loan to buy them. This may make selling your home with the panels a little harder, even if the panels still add value to it.
There are two ways this can go:
- You Can Buy Out Of The Lease
Most homebuyers will prefer this option, and it is not a bad deal for the seller either.
You, as the seller, can add the value added by the panels to the sale price of the house. You will not lose any money by closing the lease. Or,
- You can wait for a buyer who does not mind inheriting the lease
Some companies do transfers. So the buyer will adopt the cost. Any federal incentives that came with your panels will also transfer to the new owner.
What Type Of Solar Panel System Should I Own
Whether your panel system is grid-tied or off-grid will also affect who your home attracts.
In remote areas, an off-grid system will increase property value and make the home more attractive.
Final Thoughts – Will Solar Panels Add Value To Your Home?
There is no doubt that solar panels will add to the value of your property. But, whether you can sell your home for that price is never a guarantee.
Not everyone places the same value on going solar. The market may change. And there are a lot of other factors in between that will affect the sale of your house even if you have solar power.
The bag is mixed, and sale prices are often case-by-case.
So will solar panels add value to your home? Yes, it will. But that value doesn’t always translate to cold hard cash. When you list your house, you may have to play the waiting game to get the price you want.
My final thought on this topic is this. Renewable energy is on the fast track. More and more people are getting on board. The trend will only increase in the years to come. That is when homeowners and buyers will see the true value solar installations add to properties.