Welcome to the latest episode of Inside Real Estate. Today our topic is “Does solar add value to a home?”
We all know that solar is popular. We all know it is good for the environment. In general, solar is highly desirable. That is a given. The question is does it add value to your property? The answer to that is: It depends.
If it is an owned system, which means you purchased the panels (that runs usually $30 – $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 up front. General rule of thumb is it takes about seven years to break even on that in savings and utility bills. But yes, it does add value to your property. Is it a dollar-to-dollar value? It is hard to say because the value of the solar is wrapped into the value of the home. There is generally not a separation for that, but generally, if it is an owned solar system, it definitely adds some value to the property because the buyer will get lower utility bills.
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 the benefit in the form of lower PG&E bills, but they have to pay a lease payment every month, so there is not as much net benefit in that. Also, it is 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.
So, 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 it costs you, the seller, more money. On balance, if you are going to sell your home in the next one, two, three years, you probably do not want to add solar to it. You are probably not going to get that investment back. If you are 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.
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