Do Solar Panels Increase Home Value?

Solar Adoption is Growing
Two years ago, the U.S. had hit 2 million solar installations and the researchers at Wood Mackenzie Power & Renewables expected "...solar installations to double by 2023." In fact, Pew Research found that 46% of U.S. homeowners are considering residential solar panels.

Increasing demand in some areas may lead to a faster sale and/or a higher sales price, but there are still a few other factors that will impact the value of your Twin Cities home on paper. 

Location Considerations
We are in Minnesota. Our weather conditions are highly variant from season to season that that is hard on our homes... and anything attached to them.  You may have read a 2019 Zillow Economic Research report, “During the past year, homes with solar-energy systems sold for 4.1% more on average than comparable homes without solar power. For the median-valued home, that translates to an additional $9,274,”  however, if you looked closer at that national report, the increase in home value varies, sometimes substantially, by region.

In Minnesota, the age and condition of the roof and solar panels may actually DECREASE your home value. The cost to repair, replace and insure the panels simply outweighs their financial benefit in Minnesota. Even if you want to install them for the environmental reward and interim savings on your utilities, there are other considerations.

You will want make sure there are no county, city or neighborhood ordinances about solar panels that factor into your decision. Compare multiple solar companies for style, warranties, etc. And - depending on your relationship with your neighbors, they may even be a factor as well. Call me to chat further on this. 

Owned or Leased?
When you refinance or sell your home to a buyer who will need financing to purchase it, the appraiser has the final say in what the home is worth. They also must report condition during their inspection and old panels could be a red flag to a lender due to the financial burden should they need replacement and higher MN property insurance costs. Whether the solar array on your roof increases the appraised value will also depend largely on whether or not you own the system.

The most common solar panel ownership scenarios, according to the appraiser guidelines at fanniemae.com, include:

• The panels are owned. Owned panels may be included in the appraised value of the property.
• The panels are leased or covered by a Power Purchase Agreement. Leased panels may not be included in the appraised value of the property.
• The panels are financed as personal property. If the solar panels are financed as personal property (and therefore serve as collateral for the loan), they will do nothing to increase the value of the home.
• The panels are financed as fixture to real estate. Panels that are considered fixtures (permanently affixed to the property) can be used in the appraisal but only if they can’t be repossessed should the seller default on the terms of the financing agreement.

If you decide to purchase solar panels, you will not likely be able to someday recoup the money you spent on them in Minnesota unless you plan extremely carefully. If you’re located in an area where solar power is popular, and you have a highly rated company install them with a warranty, your system may just help you to sell the home quicker. If you’d like more information on our local market conditions, reach out to me anytime.

As a Certified Residential Specialist with multiple additional real estate designation, certifications, awards and experience, if you’re thinking of selling or buying in MN, Sarah Marrinan would love to share her knowledge and expertise. Proudly servicing the Twin Cities, MN with extra focus in these areas: White Bear Lake, Hugo, Lino Lakes, Centerville, Vadnais Heights, Shoreview, Mounds View, Circle Pines, Mounds View, Forest Lake, Columbus, Wyoming, Saint Paul, Minneapolis, Roseville, Lake Elmo, Stillwater and Oakdale, MN.
Contact Sarah on this website at www.CallSarahFirst.com/contact

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