When going solar, a homeowner must consider many variables. How large of a system? What’s the cost? What percentage of my utility bill will I offset? What payment method makes the most sense for me? But there is one question that’s easy to forget about: How does this project affect the value of my house?
While this may not be a near-term consideration, solar panels will soon become an integral part of your home and understanding what that means for your home value can bring clarity and peace of mind. Here are some important points to explore as you continue on your solar journey.
Loan vs. Lease
How you purchase your solar energy system has implications for the resale value of the home. Most notably, leases offer much less flexibility in terms of selling the home down the road. Leasing the panels means that the holder of the lease owns the panels. To sell the home, you would need the new buyer to take over the lease.
Buying the system outright or financing the cost through a loan means that you own the system so you can build in the cost of the panels into the asking price for your home. This will allow you to pay off the loan and/or recuperate costs for going solar. According to Fannie Mae’s Selling Guide, leased systems may not be added to the appraisal value but photovoltaic (PV) systems owned by the homeowner fall under “Energy Efficient Improvements” and can add significantly to the appraisal value. While different financing options work for different people, if you’re thinking of the value of the home, it’s crucial to understand the differences between leased and owned systems when it comes to the appraised value of your home.
How Much is this Solar Worth?
You’ve gone solar. Now you’re selling your home. How much value do the solar panels add? According to a 2015 study by the Lawrence Berkeley National Lab, home buyers would be willing to pay a premium for homes with solar panels already installed. The study examined 13 years of home sale data and about 23,000 home sales. The data showed that homes with PV systems sold for an average of $4/Watt more than non-solar homes. That means that an average size system of 5kW would increase the asking price of a home by $20,000. Not exactly chump change!
How Sungage Fits In
So, what does this mean for you and how can Sungage help? Going solar is an investment that we want to make as simple and flexible as possible. With a loan through Sungage, you are eligible to build in the solar value or remaining loan balance to the asking price for the home. There are no prepayment penalties, making it simple and quick to pay off the loan if you decide to move. If you are unable to build in the solar cost to the home value, we can help you transfer the loan to the new buyer. The best advice is to consult your realtor early in the process about the solar, but Sungage is happy to help as well! Just give us a call at 844-SUNGAGE.
About the Author
Colin Munson is a Team Lead on the Solar Finance Specialist Team at Sungage. When not helping New Yorkers go solar, he enjoys exploring Boston on his bike and trying new recipes in his kitchen.