Inside Real Estate – Ep 13 – Does Solar add Value to a Home

 

Today, our topic is “Does Solar add Value to a Home”? We all know that solar is popular. We all know it’s good for the environment, in general, highly desirable. That’s a given.

 

The question is, does it add value to your property? And the answer to that is, it depends. If it’s an owned system, which means you purchase the panels, that runs usually $30,000 to $50,000 depending on the size of the home, the answer is definitely yes, it does add value to your home. Your investment has already been made upfront. General rule of thumb is it takes about seven years to break even on that in savings in utility bills. But, yes, it does add value to your property. Is it a dollar-to-dollar value? Hard to say because the value of the solar is wrapped into the value of the home. There’s generally not a separation for that, but generally if it’s an owned solar system, it definitely adds some value to the property because the buyer will get lower utility costs.

 

Now, the tricky part is leased systems. Does a leased solar system, where you lease the solar panels and pay the solar company X amount a month, does that add value to your property? I would argue not really. Buyer is getting a benefit in the form of lower PG&E bills, but they have to pay a lease payment every month. So there’s not as much net benefit in that, and also it’s a complication in closing. The buyer has to qualify to assume the lease. The term of the lease comes into question. Generally, buyers are not as excited about leased solar system. One possible option if you have a leased system, pay the lease off. A seller can pay the lease off, therefore coming close to an owned system, although the lease will expire eventually. That gives more value to the buyer, but obviously costs you, the seller, more money.

 

So, on balance, if you’re going to sell your home in the next one to three years, you probably don’t want to add solar to it. You’re probably not going to get that investment back. If you’re going to own your home longer term, solar is always a good idea and will certainly pay for itself in time and makes your home more attractive to buyers.