What is the Resale Value of My Solar Home?

Solar Electric Installation in Rancho Palos Verdes
By installing a 9.4 kilowatt solar electric system, the owners have
possibly increased the value of their home by $36,000 to $60,000.

If your home has a solar energy system, how does this translate into value for a potential buyer when the house is “For Sale”?

Today, whenever you purchase a product that uses energy, information provided by Energy Star Label is available to make comparisons. However, there is no standardized approach to assess these features for the many houses that were built before Energy Efficiency methods became widely adopted. Since there is no accepted metric used by appraisers and the real estate industry as whole to gauge the dollar value of energy saving or producing features of older homes, it is important for the prospective buyer or seller to look for an appraiser that uses the Green Addendum and for sellers to insist that solar and other green features be highlighted in their listing.

In the past, the American Appraisal Institute estimated that any feature that saved a dollar a year in operating costs would add twenty times that amount to the home’s value, because such savings would potentially increase the loan amount available to any buyer. This is an example of reverse engineering that could be considered optimistic, or even fanciful.

Since then, thousands of homeowners have installed solar photovoltaic (PV) systems and enough data now exists so that Lawrence Berkeley National Laboratory was able to conduct a comprehensive survey and establish a value for homes that produce their own energy through solar panels. Their research analyzed data from the sale of 72,000 homes in California, 2000 of which had a solar electric system. The study indicates that the average solar system added between $3.90 to $6.40 per watt, or approximately $17,000 in value for a house with a 3.1 kilowatt solar system. This would mean that in most cases today, the entire pre-incentive cost of a grid-tied solar PV system will be recaptured once the home is sold.

Many other studies have been published that speak to the importance of solar energy and other energy saving products when selling a home. The National Association of Home Builders reported that home buyers would be willing to pay an extra $7,095 for a home that saved $1,000 in utility costs. Another survey by the National Association of Realtors indicates that 87% of today’s buyers rate energy features as important.

In yet another study, the University of North Carolina has discovered that there is connection between homeowners who install green features and mortgage default rates. The researchers also determined that homes with savings of 15% or higher on utility bills are 32% less likely to default on home loans. This may be connected with the fact that houses with solar panels or other green features are cheaper to live in, and therefore mortgages are easier to pay.

There are so many reasons to go solar, not the least of which is the fact that it’s a home improvement that will not only pay for itself, but will recuperate any funds initially invested in the solar system with value added to the home at the time of sale.