Solar Home Resale Values
We know that residential solar power is an investment that can save you as much as $70,000 or more on your energy costs over the life of a residential solar power system. But at an average cost of $15,000 to $24,000 to install, solar power is often a renovation that home owners aren’t willing to invest in if they’re contemplating a move within the next few years — or even the next decade.
Though it’s easy to understand the hesitation to make a large investment in your home, only to sell it, most home owners will see that solar power systems will pay for themselves — even if you move out not long after it’s installed.
Numerous studies indicate that residential solar power systems are a good investment for home owners. You’re likely to recoup most, if not all, of the cost of installing your solar power system. And in the meantime, you get to enjoy the lowered cost of electricity that you’ll get from having a solar power system installed.
In addition to preserving the cost of your investment, solar power can make your home more attractive for sale, helping your address stand out among so many others. This can lead to faster sales and higher offers. Plus, transferring solar agreements and warranties is typically simple, as most solar power companies and utilities have planned for the inevitability of home sales.
Just how valuable can your solar power system installation be when it comes to home resale value? Read on to learn more about how much of your cost you can recoup, factors that can improve your resale value, and why home buyers love to purchase solar powered homes.
Residential Solar Power System Renovations Pay You Back
Unlike practically every other home renovation you can perform, residential solar power system renovations have a high rate of return. With most renovations, there’s just no getting back what you put into your house when you sell it. Even a minor kitchen remodel, one of the best home renovation projects for recouping your cost, will only get you 79.3% back.
But according to recent research, home buyers are often willing to pay a premium of about $15,000 for homes with typical photovoltaic systems. Depending on the size and cost of installation in your area, you could break even or even make money on installing your solar power system — and that doesn’t include the savings you’ll enjoy during the months or years when you’re able to use the solar power system for your own reduced cost energy needs.
In one study, researchers found that solar panels added a $20,194 premium to home sales prices. The authors calculated that after subsidies and financial incentives, most home owners will effectively pay about $20,892 for their solar power system installation. That’s a 97% recovery of your investment costs, far better than any kitchen remodel — and far less intrusive on your lifestyle.
Why Home Buyers Love Solar Homes
It’s not difficult to understand why home buyers might be willing to pay more for a home with solar power already installed. Secondary solar powered home owners will get the benefits of solar power, namely its reduced cost of energy, while avoiding the hassle of installation. You’ve done the work for them, and all they have to do is sit back and enjoy the sun powered energy — at a cost that’s lower than what they’d have to pay the utility company.
Buying a home with solar power already installed means home buyers won’t have to negotiate with a home owner’s association for permission to install solar panels, pull permits, or wait for the installation. And with any luck, you, the previous home owner, has already carved out a solar easement agreement that ensures they’ll have unencumbered access to the sun for their power needs.
Solar Powered Homes Sell Faster at Higher Prices
As electricity prices go up (and they will), your home — with its own built in source of electricity — will only become more valuable. This gives you the ability to market your home as green and stand out among other competing homes in your market.
Ultimately, solar powered homes will sell faster and for higher prices than other comparable homes without existing solar power. A 2010 National Renewable Energy Laboratory study indicates that homes with solar power will sell 20% faster and for 17% more than their equivalent non-solar homes.
Additionally, the study shows that home buyers prefer to choose homes that already have solar power installed. If given the choice to add solar power at the point of purchase, they often shelved the idea. But if solar was already a part of the home, they’d pick the house with solar power. That means your home is even more competitive against newly built homes that offer solar power as an option.
Selling Your Solar Powered Home for the Highest Price
Simply having solar power for your home will give you the ability to sell your home at a premium. But there are steps you can take to make sure you’re maximizing your home’s solar attractiveness to sell it at the highest possible price.
It’s essential that you don’t wait until the end of your solar power system’s lifespan to sell. Home buyers who are interested in existing solar powered homes don’t want to have to worry about replacing the system in five years. They just want to enjoy solar power worry free for at least the next decade.
That’s why it’s important to sell your home not long after the installation of your residential solar power system. It’s best to avoid an aged system. Like any other consumer electronic, buyers are wary of trusting solar power systems if they’re far from the latest model. Of course, in reality, most solar power systems will last for 20 years at 90% of their efficiency. But the perception that your residential solar power system is old may be enough to turn off potential home buyers.
You should also consider your neighborhood when determining your solar resale value. Not all neighborhoods and homes are well suited to appreciate their value simply by adding solar power, though it is generally a safe bet. The fact is that some neighborhoods will value solar power more than others.
Home buyers who are most likely to happily pay a premium for a solar powered home aren’t typically looking at small homes in low income neighborhoods. Rather, they are in affluent neighborhoods with larger homes. Even better if there are more registered Democrats in the neighborhood, as liberals tend to favor environmentally friendly measures more than their Republican counterparts. Of course, this is not a huge factor, as most people enjoy saving money on their electricity regardless of politician leanings.
Solar savvy home buyers will also be more interested if you have an existing solar easement. With a solar easement, you’ll have an agreement with your neighbors that they won’t block your ability to access the sun with your solar panels. This agreement will transfer with the house, so it absolutely will benefit the next home owner and it definitely carries value if you have it in place.
Can You Transfer Your Solar Power to a New Home Owner?
Typically, it is possible to transfer all existing solar agreements to a new owner. Most of this paperwork can be handled at closing, while others will be handled by the new home owner similarly to how they might take over your old water bill account or transfer electricity service.
Like any other standard home easement, any existing solar easement will remain with the house for new owners to take advantage of. This will allow them unencumbered access to the sun, as agreed upon by you and your neighbors.
Practically without fail, solar power warranties will transfer to new owners. Much like the warranty on an installed air conditioning system will transfer with the house to a new owner, your solar power system is like an appliance that companies will consider part of the house. Of course, new owners should contact the solar power company to register and give them new contact information for periodic inspections and other updates.
Property tax exemptions should also be no problem for the new owner. Just like a homeowner’s property tax exemption, the new owner will simply need to register with the tax authority to let them know that this exemption should still be in place for the property.
Similarly, net metering and solar renewable energy credit sales agreements should also transfer seamlessly to the new owner. However, each utility may handle their customer agreements differently, so it’s best to read your contract and contact your utility for details before putting your home up for sale. That way, you can clarify the transfer process for the new owners, and reassure potential buyers that they can enjoy all of the financial benefits you currently have access to as a solar home owner.
The bottom line: a residential solar power system is a great investment whether you plan to stay in your home for 20 years or longer, or move in just a few years. Often, home buyers are willing to pay more for a home with solar power, and the fact that you already have solar power installed on your home can make it more attractive to buyers, helping you get it off the market quickly at a great price. Transfers of solar power system agreements and warranties are typically not difficult, and new home owners can enjoy the benefits of solar power hassle free after the sale of your home.
Photo by Flickr user mountainash