Are you curious about how much your home’s value can increase with the addition of solar panels? Look no further! Our team has conducted extensive research to bring you all the latest information on the impact of solar panels on your home’s value. Discover the astonishing boost in home value with solar panels in this informative article.
Increasing Property Value
We will start with an example. Imagine you wanted to buy a home, and you’re shown two identical houses. One has a solar system installed, while the other only gets its electricity from the grid. The first home eliminates all of its electric bills, while the second home has to pay the bill.
That’s a lot of savings, and the first home will have a lower carbon footprint. Logically, you would choose the first home, as would others. This is why homes with solar systems are valued higher than homes without them. But how high are we talking? There is no precise answer to this. However, we will cover three studies to get us into an accurate estimation range.
Studies Of Property Value
David Kaserman and Ruth Johnson are researchers cited by the Appraisal Journal who have said that home value increases about $20 for each dollar saved on annual energy costs. If you save $500 monthly, your home would be worth $120,000 more than without solar ($500 x 12 months x 20 = $120,000).
The second example comes from the Lawrence Berkeley National Laboratory, which has a formula of a $5,000 resale value increase for every kilowatt (kW) of solar installed. To get the same number as in the first example, $120,000, you’ll need a 24 kW system (24 x $5,000 = $48,000).
Average installation costs are $3,500 per kW. This system would be installed for $84,000. These costs don’t include the federal investment tax credit, which can reduce the price by 30%. Some states have exemptions that allow you to pay no property tax.
Going solar can help you sell your home faster and at a premium rate. Another National Bureau of Economic Research study says buyers gave a 4% premium to homes with solar energy systems. This estimate might be basic, but many factors are involved. For starters, it doesn’t factor in the size of the solar energy system.
Solar Calculator To Estimate Home Value Increase
To determine quickly and accurately, you should use online solar calculators to reach a property value. Some factors that the calculator will consider to make its estimate are:
- Solar incentives.
- Roof space.
- Electricity rates.
We’ll also use Zillow to help you reach your estimate. Most people use Google as a search engine. However, even if you use another search engine, a Zillow link will direct you to a webpage. You’ll find a “Zestimate value” on that webpage. This is the price of your home
based on sale data from similar types of homes.
Now, assume that the calculator says a 10 kW solar panel system would suit people with energy bills of $150 a month. If we go by the Lawrence Berkeley Labs formula, we’ll see a home value increase of $50,000 (10 kW x $5,000). The Appraisal Journal article citation will churn out a value of $36,000 ($150 x $1800 x $20).
Lastly, we use the National Bureau of Economic Research study and Zillow. Assume you have a Zestimate of $400,000 for your property. A 4% increase in home value would be $16,000. Your ballpark estimate for a 10kW is between $16,000-$50,000.
Factors Affecting Cost
You should always keep records of your solar system if you decide to sell it one day. This will prove your purchase and that you have installed the system from a trusted installer with proper permitting. You should also preserve our power bills and system warranty information.
These will be your proof of energy saving. Keep all records in a safe space and ensure that your real estate agent handles the document processing correctly with the buyer. This will give you the maximum value of your property.
Remember that a person with a solar lease doesn’t own the system, so they can’t sell it either. This means that a solar system on a lease doesn’t increase home value. Electricity bill savings are another thing, but since a solar company owns the panels, they can remove them from your property anytime. Solar leasing forfeits all incentive rights from the homeowner and grants them to the solar company so that a new buyer won’t benefit from them.
Solar panels can last, on average, 25 years and even more than that with the proper care. Location is important in determining how cost-saving and income-producing solar panels can be. Since every state has different utility costs, it takes time to pinpoint an exact price. Plus, there are different tax exemptions and solar policies to look out for.
A few states pay you money for the renewable energy you produce. These are called performance-based solar incentives. Two areas that apply these incentives are New Jersey and Massachusetts. If you live in these areas, then your home will be worth a lot more.
Even if you don’t live in these areas, there might be other places where you can avail other performance-based solar incentives. Surf the internet to find out more areas where you could increase the value of your home.
Just as some areas provide incentives and others don’t, some areas have higher electricity charges. If you have a solar system in an area with high electricity costs, you could save a lot on utility bills and gain huge profits through net metering.
Solar System Age:
If your solar panel system is ancient, nothing can increase its value. This is because technology has advanced rapidly, and nowadays, we have highly efficient panels in the market. The newer the panels, the higher their value. You will fetch a good price if your panel has at least 20 years of life left.
You might be unsure of going solar, but we assure you that the earlier you go solar, the earlier you can reap all the benefits. You’ll save money on electricity bills but also increase your home’s value in the long run. Your home will have a higher resale chance. Solar is a smart investment that is beneficial for your home.