Does Solar Add Value to Your House?

Solar systems will add value to your home, but it really depends on what kind of financing you use to purchase the solar system. You have five options, and some are definitely better than others.

One of the most popular questions homeowners and buyers ask me is: Does solar really add value to your house? I’m not talking about solar for your pool; I’m talking about eliminating your SDG&E bill. 

Solar does add value to your home depending on how you finance the system. A typical solar system runs anywhere from $20,000 to $30,000. As far as financing, there are five standard options. Here are the options, from best to worst: 

1. Outright purchase. This is by far the best option. You will no longer have an electricity bill, which buyers will find extremely valuable. You will also get a 30% tax credit from the IRS at the end of the year. Purchasing a solar system is a great way to add value to your home while saving you (and your buyer) hundreds of dollars a month. 

2. Financing. You can finance your solar system purchase through a home equity line of credit from a credit union or bank. You will still receive the 30% tax credit at the end of the year, and the solar system is easily transferred to a buyer. 

3. Prepaid Lease. Basically, you would pay the solar company for 20 years of electricity up front. Your cost would actually be 70% of the total cost of the system because the 30% tax credit comes off of the price. The lease will transfer to the buyer, no qualifications necessary. 

4. Traditional Lease. Leases typically last about 20 years. The problem is that when you sell your home, the buyer will ask you to pay off the rest of the lease before they purchase your home. If you don’t pay off the lease, then the buyer has to qualify to pay for the lease in addition to qualifying for a mortgage, which can be difficult. Most importantly, if the monthly lease payments are too high, the buyer will just pass on your house altogether.

5. Power Purchase Agreement, or PPA. If you get a PPA, you will lease the solar system and pay the solar company a monthly fee for a certain amount of electricity. If you use more power than you generate, then you will have to pay two bills: one to the solar company, and one to SDG&E. 

Obviously, some of these options come with more advantages than others. If you are looking into different solar options or how you can add value to your home, please call me. I would love to connect you with the right solar company so that you add the most value to your home. I look forward to speaking with you!

Dale Downing
BRE# 01338330

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