Does Solar Increase the Value of My Home?

With Utility costs steadily on the rise, we are seeing more and more homes going to electric solar panels on the roof, in an attempt to minimize – if not eliminate – their electric bill. And more often I’m being asked the question, “Does Solar increase the value of my home?”  The short answer is “Yes”. Solar does increase the value in the eyes of most buyers, but there are certain parameters to consider and be wary of, when pondering the installation of solar in your home.

Home Value. I’ve interviewed several lenders, appraisers, solar companies – and even a few home owners. All believe that solar adds somewhere between 40% to 80% (of its cost) to the value of your home. I believe that number is closer to the 40%, which is still great. Keep in mind that increasing the “value” by installing solar is an added bonus. Your primary reason to add solar should be to eliminate or minimize your electric bill, today and in the future as utility costs continue to rise.  In addition, the Federal 30% Tax Credit is still available and equate to dollars in your pocket. For example, if you purchase a $20,000 solar system, your 30% credit back is $6,000. In other words, if your tax bill to the IRS is $14,000 for the year, it now becomes just $8,000.

Does solar become “more” valuable to a home in years to come? While there is no certainty – I believe, as do others, that solar will become more popular in the home as consumers become more familiar with this industry. And as the average home buyer becomes more familiar with the benefits, it is likely that they may also be willing to pay a higher price for a home with solar already installed.

Should I lease solar or buy? If you can afford to pay cash vs finance your solar purchase, I recommend going that route. There are several lenders who will provide a Home Equity Line of Credit or other types of financing. This way you can take advantage of the 30% Tax Credit. If you lease, the 30% tax credit is not available to you and while a majority of the buyers did appreciate the lower utility bills, a 20 year lease was not appealing, extending the length of time it took to sell the home.

Other considerations for solar? Be sure to choose a company where solar is their main line of business. A lot of small companies are trying to do solar on the side, and may not get the best results. Ask for references from their past clients, and certainly look for referred solar companies from friends/family members who have installed solar.  Be sure to ask the installer if their manufacturer is U.S. based, or if foreign, do they have a U.S. based office for service and warranty purposes? Also, for ongoing warranty & maintenance, ask the installer if the manufacturer is “bankable?” In other words, do they have a financial plan in place to survive should the federal 30% tax credit go away, creating a potential downturn in the solar market?  Because the utility savings payback may take between 5 to 8 years, don’t install solar if there is a good chance you may be moving in 2 to 3 years. Enjoy the 30% Tax Credit, but be sure to gain several years of savings as well. For more information, contact SEPA (Solar Electrical Power Association – a national organization) at 202-857-0898.