I’m often asked “Do solar panels add value to a house?” to which I answer yes! If you are already a solar homeowner, you know the value because you see substantial energy savings every month, plus you know what you paid for the system and you wouldn’t be foolish enough to pay for something of no value.
But what about the value to the next owner of your home and to their lender? We all know that new roofs, granite counters, and replacement windows add value but what about that solar panel array that costs you $10,000 – $40,000? Most buyers are financing their purchase so it’s vital that their lender understand the value, which means it needs to be included in the appraisal.
Realtors can be very good at determining a list price based on recent sales of comparable properties (“comps”) and we’ll make adjustments based on your home’s specific features or challenges. Appraisers are educated to take it a bit further. In addition to using the comps, they can incorporate a cost-approach to support value when the comps aren’t sufficient. In the case of solar homes, comparable data isn’t readily available yet. Try finding three of four near-matching recent sales that didn’t have solar panels, three or four that did have them and then compare the sale prices of the solar and non-solar homes. It could be years before we have those comps, which is why it’s important that your real estate agent provides the appraiser with a detailed report of your home’s solar and energy-efficient features to help justify the value. Specifically, they should be providing the Appraisal Institute’s Residential Green and Energy Efficient Addendum and a PV Value report whenever possible. Accuracy of information is vital for these reports to be included in the appraisal so make sure you have a qualified professional complete the questionnaire and run the reports.
The one caveat to keep in mind is that solar panels must be owned outright by the seller for an appraiser to give them value. Leased panels cannot be given value, nor can panels that are still attached to a lien or UCC filing. Not sure what type of ownership you have? Give me a call and I’ll help you figure it out!