Do Homes with Solar Panels Sell for More? Here’s What the Data Says

By The Paul Kaplan Group

With rising energy costs and increasing environmental awareness, solar panels have become a sought-after feature for many homebuyers. And if you live in the Palm Springs area, at first glance, solar makes sense because we have an abundance of sunshine most of the year!  But do homes with solar panels really sell for more? The answer is a resounding yes—and multiple studies back this up. Homes equipped with solar panels not only tend to fetch higher prices, according to studies listed below, but also sell faster in competitive markets.

Here’s what the research reveals about the impact of solar panels on home value:

📈 1. Study by Lawrence Berkeley National Laboratory (LBNL)

One of the most in-depth studies on solar homes, conducted by the Lawrence Berkeley National Laboratory (LBNL), analyzed nearly 23,000 home sales across 8 states. The study, titled “Selling Into the Sun: Price Premium Analysis of a Multi-State Dataset of Solar Homes”, highlights how solar systems impact property value.

✅ Key Findings:

• Homes with solar panels sold for an average of 4.1% more than comparable homes without solar.

• For a median-priced home, this premium translated to about $15,000.

💸 2. Zillow Study on Solar Homes

A 2019 study by Zillow, a leading online real estate marketplace, found similar results. Their analysis revealed that solar-powered homes sold for a significant price premium across multiple markets.

✅ Key Findings:

• Homes with solar panels sold for 4.1% more nationwide.

• On average, homes fetched an additional $9,274 due to their solar installations.

• In solar-friendly states like California, the premium was even higher.

Read the full Zillow Study on Solar Homes.

🌞 3. National Renewable Energy Laboratory (NREL) Study

The National Renewable Energy Laboratory (NREL) analyzed the financial benefits of solar systems and their impact on home value. Their findings suggest a direct correlation between annual energy savings and increased home value.

✅ Key Findings:

• For every $1 saved annually on energy bills, a home’s value increases by approximately $20.

• A solar system that saves homeowners $500 per year could potentially boost a home’s value by $10,000.

Explore the full NREL analysis for more details.

📊 4. Appraisal Institute Guidelines for Solar Homes

The Appraisal Institute has developed guidelines that appraisers use to assess the value of homes with solar panels. They recommend using the “Income Approach” to calculate the value added by a solar system based on projected energy cost savings.

✅ Key Findings:

• Solar panels can add between 3% and 5% to a home’s value, depending on the system’s size, location, and quality.

• Homes with owned solar systems (as opposed to leased systems) tend to see a higher value increase.

For more information, check out the Appraisal Institute’s Green Valuation Tools.

💰 How Much More Do Buyers Pay for Homes with Solar?

On average:

• 4%–5% premium for homes with solar panels.

• An increase of $10,000–$15,000 for a median-priced home.

• Higher premiums in states with higher electricity costs and generous solar incentives.

🏡 Factors That Influence the Value of Solar Homes

Several factors affect how much solar adds to a home’s value:

1. System Size and Age: Larger systems with newer, efficient panels add more value.

2. Ownership vs. Lease: Owned systems typically increase value, while leased systems may complicate the sale.

3. Local Electricity Rates: Higher electricity costs lead to more significant savings, which increases the appeal of solar homes.

4. Market Demand: Areas with high demand for energy-efficient homes see the most substantial price premiums.

⚡️ Pro Tip for Sellers:

When selling a home with solar panels, highlight the energy savings, environmental benefits, and reduced utility bills in your marketing materials. This helps buyers see the long-term value, which justifies a higher asking price.

⚠️ The Cons of Solar: What Homeowners Should Know

While solar panels offer numerous benefits, it’s essential to consider the potential downsides before making a commitment. Unfortunately, many solar companies have gone bankrupt in recent years, leaving homeowners in uncertain situations. This can present challenges, especially if the company that installed your solar system goes out of business or changes ownership.

✅ Servicing and Warranty Complications:
If your solar company goes bankrupt or is acquired by another company, it can become difficult to determine who is responsible for servicing your system. Homeowners may be left scrambling to identify the new company taking over the service agreements, and home warranties tied to the solar system may be in limbo during the transition.

✅ Leased Solar Programs and Selling Complications:
If your solar system is leased rather than owned, selling your home can become complicated. In cases where a solar company has gone out of business or changed ownership, it can be difficult to track down the entity responsible for the lease. Without identifying the correct company or contact, it’s impossible to get the necessary approvals to transfer the solar lease to the new homeowner. We've unfortunately seen deals fall apart due to this very issue, leaving both buyers and sellers frustrated.

✅ Impact on Loan Qualification:
For buyers purchasing a home with a leased solar system, the lease adds another financial obligation that can impact loan qualification. Lenders factor in the additional cost of the solar lease as debt when calculating a buyer’s debt-to-income (DTI) ratio. In some cases, this added liability may reduce the amount a buyer qualifies for—or even disqualify them from securing a loan altogether.

✅ Return on Investment (ROI) Considerations:
While solar can lead to long-term savings, homeowners should evaluate the actual financial benefits before committing. For example, if a solar system costs $40,000 and the homeowner only plans to stay in the house for 10 years, the payoff may not be worth it. Dividing $40,000 by 120 months (10 years), the cost comes to over $333/month. It’s essential to compare this amount to the average monthly electric bill to determine whether solar will genuinely provide a return on investment. If the monthly energy savings don’t exceed this amount, solar may not be the best financial decision for shorter-term homeowners.

⚖️ Weighing the Risks and Rewards

While solar panels can be a fantastic investment for long-term homeowners who want to reduce energy costs and improve sustainability, it’s important to weigh the potential risks before making a decision. At The Paul Kaplan Group, we’ve seen firsthand how solar-related complications can affect real estate transactions, and we’re here to guide you through every step—whether you’re buying, selling, or exploring solar options for your home. 🌞🏡

🤝 Conclusion: Do Solar Homes Sell for More?

The data is clear—homes with solar panels sell for more and sell faster in today’s market. Buyers are increasingly valuing the long-term cost savings and environmental impact associated with solar energy. When buying a home, check the comps for other similar homes that have sold in the neighborhood;  and break down the comparison with those homes that had solar and those that do not.   Whether you’re considering adding solar to your home or selling a solar-equipped property, The Paul Kaplan Group can guide you through the process and help maximize your home’s value.

👉 Contact us today to learn how solar can boost your home’s marketability and attract eco-conscious buyers! 🌞🏡