TL;DR
- Owned solar panels add roughly 4% to 7% to a home's sale price, according to research from Zillow and Lawrence Berkeley National Laboratory, with the exact premium depending on location, system size, and local electricity rates.
- Leased solar panels and power purchase agreements (PPAs) are a different story: they add little to no value and can complicate the sale, since buyers must qualify to assume the contract.
- Appraisal challenges remain the biggest obstacle, with 73% of agents unsure whether local appraisers can properly value solar, according to the NAR 2025 Sustainability Report.
- Selling successfully requires documentation of system specs, energy savings history, warranty information, and working with a real estate agent experienced in solar transactions.
- The solar premium varies widely by state, ranging from roughly 10% in New Jersey to near zero or negative in a few markets with low electricity costs.
Do Solar Panels Increase Home Value? What the Research Shows
With more than 5 million solar installations across the United States as of 2024, according to the Solar Energy Industries Association (SEIA), solar panels are no longer a novelty. Roughly 7% of American homes now have rooftop solar, and that number is projected to climb above 15% by 2030. As solar becomes mainstream, one question matters more than any other to homeowners considering a sale: do those panels on your roof actually translate into a higher price at closing?
The short answer is yes, in most cases, but the details matter enormously. The ownership structure of your solar system, your local electricity rates, the age of your equipment, and your ability to document the system's value all play major roles in whether you capture a premium or face buyer resistance.
The Key Studies Behind the Numbers
Two landmark studies form the foundation of what we know about solar's effect on home values. The first, published by Lawrence Berkeley National Laboratory (LBNL) in 2015, analyzed nearly 22,000 home sales across eight states. Researchers found that buyers consistently paid a premium of approximately $4 per watt for homes with owned solar photovoltaic systems. For a typical 3.6 kW system at that time, that translated to roughly $15,000 in added value. Importantly, this study examined only homeowner-owned systems, not leased panels.
The second major study came from Zillow in 2019. After analyzing homes sold between March 2018 and February 2019, Zillow found that solar-equipped homes sold for 4.1% more on average than comparable homes without solar. For the median-valued home at the time, that premium amounted to about $9,274. The premium varied significantly by market: 5.4% in New York, 4.4% in San Francisco, and 3.6% in Los Angeles.
More recently, SolarReviews replicated Zillow's methodology in 2024, analyzing more than 400 homes sold between 2020 and 2023. Their findings suggest the premium has grown: solar homes sold for approximately 6.8% more than comparable non-solar homes, translating to roughly $25,000 for a median-valued home. While this study had a smaller sample size than the original Zillow and LBNL research, it aligns with the broader trend of increasing consumer demand for energy-efficient features.
Most major solar value studies, including the LBNL and Zillow research, focused on homes with owned solar systems. Data on the resale impact of leased systems and PPAs is far more limited, and the available evidence suggests those arrangements contribute little to no value premium. When evaluating claims about solar home premiums, always check whether the data distinguishes between owned and leased systems.
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Find a Top Agent Near YouOwned vs. Leased Solar Panels: How Ownership Changes Everything
The single biggest factor in how solar affects your home sale is not the size of the system or the brand of panels. It is whether you own the system outright or have a third-party ownership arrangement through a lease or power purchase agreement (PPA). This distinction can be the difference between a smooth sale with a nice premium and a complicated transaction that narrows your buyer pool.
| Factor | Owned (Cash or Loan Paid Off) | Solar Loan (Balance Remaining) | Leased / PPA |
|---|---|---|---|
| Value Added to Home | 3% to 7% premium in most markets | Premium exists, but loan balance must be settled | Little to no premium; may reduce buyer pool |
| Appraisal Impact | Can be appraised using income, cost, or comparable sales approach | May contribute value if UCC lien can be cleared | Cannot contribute value per Fannie Mae guidelines |
| Buyer Experience | System transfers with the home like any fixture | Loan must be paid off at closing or transferred (varies by lender) | Buyer must qualify for and agree to assume remaining contract (10-25 years) |
| Title Complications | None | UCC-1 filing may need to be released | UCC-1 filing present; must be addressed before closing |
| Tax Benefits to Buyer | Property tax exemptions (if available in state) | Property tax exemptions (if available) | No tax benefits; those belong to the leasing company |
| Complexity Level | Low | Moderate | High |
Selling With Owned Solar Panels
If you purchased your solar system with cash or have fully paid off a solar loan, you are in the strongest position. The panels are a permanent fixture of your home, just like a remodeled kitchen or a new roof, and they transfer to the buyer at closing without any third-party involvement. An appraiser can assess the system's contribution to your home's value, and buyers see only upside: lower electricity bills with no ongoing payments or contracts.
To maximize the premium, you should prepare documentation that includes the system's capacity (in kilowatts), the installation date, the original cost, warranty details, historical energy production records, and a summary of annual electricity savings. This information helps both the appraiser and the buyer understand exactly what they are getting. Agents experienced in selling solar homes recommend creating a one-page "solar fact sheet" for the listing.
Selling With an Active Solar Loan
If you still owe money on a solar loan, the process depends on how the loan was structured. Unsecured solar loans are not tied to the property, meaning you can sell the home and continue making loan payments separately, or pay off the balance from the sale proceeds. Secured solar loans, however, are linked to the property through a UCC-1 financing statement. This is a type of lien on the solar equipment that must be resolved before the sale can close. In most cases, sellers pay off the remaining loan balance from the sale proceeds at closing.
Selling With a Solar Lease or PPA
Leased solar panels and power purchase agreements create the most friction in home sales. Under both arrangements, a third-party company owns the solar equipment on your roof. You are essentially renting the panels (in a lease) or buying the electricity they produce at a set rate (in a PPA). These contracts typically run 20 to 25 years, and they introduce several complications for sellers.
First, the buyer must agree to assume the lease or PPA, which means meeting the solar company's credit requirements. While most buyers who qualify for a mortgage will also qualify for a lease transfer, the extra step adds friction and can cause delays. Second, some buyers simply do not want to inherit a long-term contract they did not negotiate. According to NAR's 2025 Sustainability Report, understanding how solar panels impact a transaction was the number-one sustainability-related challenge cited by 58% of agents surveyed.
- Escalation clauses: Many leases and PPAs include annual rate increases of 1% to 3%, which can erode savings over time, especially if utility rates remain stable or drop.
- Remaining contract length: A lease with 18 years remaining is a far bigger commitment for a buyer than one with 5 years left.
- Buyout costs: Early termination fees can be substantial, sometimes exceeding the original cost of purchasing the system outright.
- UCC-1 filings: Leasing companies place liens on the solar equipment, which can complicate title work and mortgage underwriting.
- Non-transferable warranties: Some lease agreements limit or exclude warranty transfers to new owners.
If you have a leased system and plan to sell, contact your solar company well in advance (at least 45 to 60 days before your target listing date) to understand transfer procedures and buyout options. Some sellers find that buying out the remaining lease and owning the system outright before listing simplifies the transaction and may result in a higher net sale price, though this requires careful math based on the buyout cost versus the expected value increase.
The Appraisal Problem: Why Solar Value Often Goes Unrecognized
Even when solar panels clearly add value to a home, that value does not always show up in the appraisal. This is one of the most frustrating realities of selling a solar home, and it has direct financial consequences. If the appraiser does not credit the solar system's contribution, the buyer's mortgage amount may not reflect the home's full value, potentially undermining the sale price.
The core issue is competency. The Appraisal Institute, the nation's largest professional association of real estate appraisers, offers specialized training on valuing solar systems, but many appraisers have not completed it. NAR's 2025 Sustainability Report found that 73% of agents were unsure whether appraisers in their area were properly educated on the value of sustainability features, and 52% cited valuation of solar panels as a specific knowledge challenge.
Three Approaches to Solar Appraisal
There are three standard methods appraisers can use to value solar panels, though not all appraisers are equipped to apply them:
Under Fannie Mae's appraisal guidelines, solar panels that are leased, under a PPA, or separately financed with a UCC lien may not contribute to the appraised value of the property. Only systems that are fully owned by the homeowner (with no liens or third-party arrangements) can be credited as adding value in a conforming mortgage appraisal. This rule alone explains much of the value gap between owned and leased solar systems.
To protect your interests when selling, request in writing that the lender assign an appraiser with experience valuing solar homes. The Appraisal Institute maintains a registry of appraisers who have completed their solar valuation course. Providing the appraiser with complete documentation of your system, including installation costs, capacity, age, warranty details, and historical energy production, can make the difference between a fair valuation and one that ignores your solar investment entirely.
How Much Do Solar Panels Increase Home Value? It Depends on Where You Live
The solar premium is not uniform across the country. It is driven primarily by local electricity rates, state solar incentives, net metering policies, and overall market demand for energy-efficient homes. In states with high utility costs and strong solar markets, the premium is substantial. In areas with cheap electricity and limited solar adoption, the premium may be minimal or even nonexistent.
According to Zillow's research, the equity impact of solar varies significantly by region. The highest premiums appear in states with expensive electricity and favorable solar policies:
| State/Market | Approximate Solar Premium | Key Drivers |
|---|---|---|
| New Jersey | ~9.9% | High electricity rates, strong net metering, SRECs |
| New York Metro | ~5.4% | High utility costs, state incentives, dense market |
| Pennsylvania | ~4.9% | Above-average electricity rates, growing solar market |
| San Francisco | ~4.4% | High home values, strong environmental demand |
| Los Angeles | ~3.6% | Large solar market, high utility rates |
| Orlando, FL | ~4.0% | Growing solar market, high cooling costs |
| Riverside, CA | ~2.7% | Established solar market, moderate rates |
| Nebraska / Wisconsin | <2% | Low electricity rates, limited solar adoption |
These figures should be treated as directional rather than precise, since market conditions shift over time and individual home features vary. The LBNL research also identified a "green cachet" effect: buyers pay a baseline premium for any solar installation, with incremental increases for larger systems. However, that premium depreciates as systems age, meaning a 2-year-old system commands a higher premium than a 15-year-old one.
Know Your Solar Home's True Value
A knowledgeable agent can help you document your system, find a qualified appraiser, and market your solar investment to the right buyers.
Get Matched With a Local ExpertSolar Home Value Framework
Estimated Solar Home Premium Calculator
Estimate the potential value your solar system adds to your home based on research data from LBNL and Zillow. This tool provides directional estimates for educational purposes.
Estimates based on LBNL and Zillow research. Actual premiums vary by location, utility rates, buyer demand, and appraiser competency. This calculator provides educational estimates and should not replace a professional appraisal.
How Solar Panels Affect Your Buyer Pool
Solar panels do not appeal to every buyer equally, and understanding this dynamic is important for pricing and marketing your home correctly. The appeal of a solar home breaks down along several lines.
Environmentally conscious buyers and those with high electricity bills are generally the most enthusiastic. For these buyers, a well-documented solar system with a track record of significant energy savings is a genuine selling point. In markets where electricity rates are high, such as the Northeast and California, the financial case for solar is easy to make, and these buyers may bid aggressively for a solar home.
However, some buyers are indifferent to solar, while others actively view it as a complication. According to NAR's 2025 Sustainability Report, 48% of agents said that having solar panels actually made it more difficult to sell a home. This figure includes homes with all types of solar arrangements, and leased systems disproportionately drive that perception. Still, it highlights the importance of choosing a listing agent who can effectively communicate the value of solar to potential buyers rather than letting it become a sticking point.
Buyers who are concerned about solar typically worry about maintenance and repair costs for aging equipment, roof condition underneath the panels, the aesthetics of panels on the home, the complexity of understanding lease or PPA terms, and uncertainty about the system's remaining productive life. A proactive seller can address most of these concerns with proper documentation. Having a pre-listing inspection of the solar system, similar to a pre-listing home inspection, can reassure buyers and prevent surprises during due diligence.
How to Prepare Your Solar Home for Sale
Whether your system is owned, financed, or leased, preparation is key to capturing the most value. Here is what to do before listing:
Tax Implications for Solar Home Sellers
Solar panels generally do not create direct tax complications when you sell your home. The solar system is treated as a home improvement, meaning it adds to your cost basis. When you sell, the original cost of the solar installation increases your adjusted basis in the property, which can reduce any capital gains tax owed. If you claimed the federal solar Investment Tax Credit (ITC) when you installed the system, you do not have to recapture that credit upon sale, as long as you owned and used the system for its intended purpose.
Many states also offer property tax exemptions for solar installations, meaning the added value of the solar system is excluded from property tax assessments. This is a meaningful benefit for both current homeowners and buyers, since the home's value increases without a corresponding jump in property taxes. Policies vary by state, so check with your local tax assessor's office or review your state's solar incentive database at the U.S. Department of Energy's solar resources page.
A Buyer's Guide to Evaluating a Solar Home
If you are on the buying side, evaluating a solar home requires additional due diligence beyond a standard purchase. Here are the critical questions to ask and verify:
Determine the ownership structure immediately. Before anything else, find out whether the solar system is owned, financed, or leased. This single fact determines how the panels affect the transaction, the appraisal, and your long-term obligations. Ask to see the original financing documents.
Review energy production data. Request at least 12 months of monitoring data showing actual energy production. Compare this to the seller's utility bills to verify the savings claims. Systems that consistently underperform their projections may have maintenance issues or may have been oversold.
Check warranty status. Solar panels typically carry 25-year performance warranties, but inverters (which convert DC power to AC) often have shorter warranties of 10 to 15 years. Verify that all warranties are transferable and find out whether any components are approaching the end of their coverage. For systems with equipment nearing end-of-life, factor replacement costs into your offer.
If the system is leased, understand the full contract. Read the entire lease or PPA agreement. Pay close attention to the monthly payment or per-kWh rate, annual escalation percentages, remaining contract term, transfer requirements and fees, early termination penalties, and end-of-term options (purchase, renew, or remove).
Evaluate the roof. Solar panels typically last 25 to 30 years, but if the roof underneath is 15 years old, you may face the expense of removing and reinstalling the panels for a roof replacement during your ownership. Factor this potential cost into your assessment.
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See Top-Rated Agents in Your AreaFrequently Asked Questions
Do solar panels increase home value?
Yes, in most markets. Research from Lawrence Berkeley National Laboratory found that buyers paid roughly $4 per watt for homes with owned solar systems, and Zillow's 2019 study found a 4.1% average premium for solar homes. However, the premium varies widely by state, local electricity rates, and whether the system is owned or leased. Leased systems and PPAs add little to no appraised value and may complicate the sale.
Is it harder to sell a house with solar panels?
It can be, depending on the ownership structure. Homes with fully owned solar systems generally sell smoothly and often for a premium. However, NAR's 2025 Sustainability Report found that 48% of agents said solar panels made homes more difficult to sell. This is largely driven by leased systems and PPAs, which introduce contract transfers, credit checks, and additional paperwork into the transaction. Working with an agent experienced in solar transactions can significantly reduce these complications.
Can I sell my house if I have a solar lease or PPA?
Yes, but the process involves extra steps. You have three primary options: transfer the lease or PPA to the buyer (who must meet the solar company's credit requirements), buy out the remaining contract and include the system as an owned asset in the sale, or prepay the remaining lease payments. Contact your solar company at least 45 to 60 days before listing to understand your specific options and costs. Most solar companies have dedicated departments to handle lease transfers during home sales.
How do appraisers value solar panels on a home?
Appraisers can use three approaches: comparable sales (comparing to similar solar homes that have recently sold), the income approach (calculating the present value of future energy savings), and the cost approach (estimating replacement cost minus depreciation). The Appraisal Institute considers the income approach most appropriate for solar valuation and offers specialized training for appraisers. However, many appraisers lack this training, which can result in solar value being underreported. Sellers should request an appraiser with solar experience and provide complete system documentation.
Do solar panels affect my property taxes?
Many states offer property tax exemptions for solar installations, meaning the added value of your solar system is excluded from property tax calculations. This is a significant benefit: your home's market value increases, but your property taxes do not rise accordingly. However, exemption policies vary by state and sometimes by municipality, so check with your local tax assessor's office or your state's energy office for specifics.
What happens to my solar panels if I refinance my home?
If you own the solar system outright, refinancing is straightforward. The panels are part of your home and should be included in the appraisal. If you have a solar lease, PPA, or loan with a UCC-1 filing, the leasing or lending company may need to temporarily "lift" or subordinate the UCC filing for the refinance to proceed. This can add time and complexity to the process, so notify your solar company early if you plan to refinance.
Should I install solar panels before selling my house?
It depends on your timeline and local market. If you plan to sell within a year, installing solar may not be the best use of capital, since you will not benefit from the energy savings and the upfront cost may not be fully recovered in the sale premium. However, if your market strongly favors solar homes (high electricity rates, strong demand for energy efficiency), and you can purchase the system rather than lease it, the premium may exceed your investment. Consult with a local real estate agent who can provide comparable sales data for solar homes in your area.
How much do solar panels save on electricity bills?
Savings depend on your system size, local electricity rates, sun exposure, and utility billing policies (such as net metering). The average U.S. household with solar saves between $600 and $1,500 per year on electricity. Over a 25-year system lifespan, total savings typically range from $15,000 to $40,000 or more. Higher-rate states like California, Massachusetts, and New York tend to see greater savings. These projected savings are a key input in the income-based approach to appraising solar value.
