The solar panel revolution has been spurred by new developments in technology and aggressive companies with large door-to-door sales teams pushing sales. A common misconception that these well-trained sales teams “sell” to interested homeowners is that an expensive solar panel array will reduce their energy expense as well as increase their home’s value, and therefore will enable them to increase the asking price when it comes time to sell. But such is not necessarily the truth. While solar panels can indeed decrease energy usage, they come with an annual maintenance cost and they do not necessarily increase your home’s value.
If you’re wondering how to assesses solar panels in a home valuation for a home purchase in Arizona, here are some helpful things that you need to know:
Did you know that Fannie Mae has published updated guidelines about solar panels for residences that mandate that the solar panels be owned, not rented or leased, if the owner wants to include them in the home’s valuation?
So, if the panels are leased or rented, they can’t impact the home’s value during sale because they are not included in the overall valuation. If the home has leased/rented panels, Fannie Mae requires that the home is connected to a viable utility company for ongoing power usage. What’s more, the updates declare that homeowners need to include information on the lease/rental cost, if the panels are leased, and or the cost of annual maintenance and benefits that the panels offer, if they are owned, in the terms and conditions on the sale. Naturally, leased panels can reduce the valuation of the home.
How Much Can Solar Panels Increase Value?
It’s natural to wonder how much the home’s value can increase with solar panels. The Lawrence Berkeley National Laboratory has issued a report (for California) that gives us a better idea. In a nutshell, the valuation of the home is increased by $5,900 for every 1 Kilowatt (kW) of raw power that the solar panels generate. But, as the panels age, the value they add to a home can decrease. Over the course of a year, they can reduce in value added by as much as 10%or more.
Things to Consider
If you are in the process of home shopping in Arizona and are wondering how solar panels in a home valuation factor into the asking price, you’ll want to consider consulting with a Phoenix real estate attorney. Qualified legal counsel can guide you through the valuation process and can provide review and advice pertaining to any contracts once you go to sale. This way, you can make the purchase with peace of mind, knowing you’ve conducted proper due diligence.