Solar panels have become a popular choice for Kansas City homeowners seeking to reduce their carbon footprint and lower energy costs. However, the notion that installing solar panels automatically boosts the value of a residential property is a common misconception. I realize the salesman who came to your door assured you they do, but let’s be honest, his job is to sell you solar panels and he’s not qualified to make these statements. In this blog post, we’ll delve into the reasons why solar panels might not always lead to a significant increase in home value.
Initial Cost vs. Perceived Savings:
While solar panels can undoubtedly lead to reduced energy bills, the initial cost of installation can be substantial. Many potential homebuyers may be deterred by the upfront expense, especially if they do not plan to stay in the house for fifteen or more years to recoup their investment through energy savings.
Technology and Efficiency Upgrades:
The field of solar technology is rapidly evolving. New and more efficient solar panel models are introduced regularly, which means that older installations may become outdated much sooner than expected. This possibility can lead to potential buyers questioning the value of existing solar installations, knowing that they may need to upgrade or replace them in just a few years.
Maintenance and Repairs:
Solar panels require regular maintenance and occasional repairs. Prospective buyers might consider the potential hassle and costs associated with maintaining the solar system, which could affect their perception of the property’s overall value.
While aesthetics are subjective, some homebuyers might find the appearance of solar panels on a roof less appealing or harmonious with the architectural style of the house. This quite often leads to a decrease in perceived value for these buyers.
Neighborhood Trends: The impact of solar panels on home values can vary depending on the location. In some areas, solar panels might be more sought after and could contribute to a perceived value (mostly in country properties). In others, they may not be as influential in driving up prices. In the last few years, I’ve had some experience speaking with HOA (homeowner association) board members who were considering regulating the installation of solar panels. Many of them wanted to prohibit the installation of roof panels that face the street stating the appearance of solar panels could actually lessen the value of their neighborhood.
Appraisals: Appraisers might also find it challenging to accurately assess the value added by solar panels, especially if there is a lack of comparable properties with solar installations in the area. Last week my real estate team invited a 30-year veteran appraiser to our team meeting and the subject of solar panels came up. He told us Freddy Mac, Fannie Mae, and the Veteran’s Administration give no value whatsoever to solar panels. Because of these federal government guidelines, appraisers do not currently give them any value in their home assessment.
Misalignment with Buyer Preferences:
Preferences for energy sources and environmental concerns can vary widely among buyers. Some individuals might not prioritize solar energy or might have reservations about the reliability of renewable energy sources. Many buyers also have questions that are not easily answered in black and white terms. As a result, the perceived value of solar panels might not align with every potential buyer’s preferences and it’s very easy for them to simply dismiss the home with solar panels in preference for another home without them.
To be clear, I’m not necessarily trying to be critical of solar panels. The number one benefit of solar panels is pretty straightforward – when you install solar power for your home, you generate your own electricity, become less reliant on your electric utility, and reduce your monthly electricity bill as a result. If that’s your goal, then you should do it. Contrary to the solar panel salesperson’s suggestions though, I’m simply making the statement that the installation of solar panels does not increase the home’s value when it comes time to sell.
Before you start thinking about the worth of your home or whether to shake things up with changes, I always advise giving us a call. Quite often, we’ve already been through this with other clients and can give advice that has YOUR best interest in mind. We can typically advise you on who to call and even recommend a vendor for your project if necessary. Whether it’s solar energy or anything else for your home, we are here for you!