According to Freddie Mac’s updated guidelines regarding solar appraisal value (effective 08/07/2024), solar panels can increase your home’s value—if you own them. But if your panels are leased or under a PPA, they won’t be included in the appraised value.
For properties where the homeowner owns the solar panels outright or finances them as a fixture to the property (such as through a loan secured by the property), solar can add value to the home and be considered in the appraisal.
However, if the solar panels are part of a lease or power purchase agreement (PPA) where the panels are not owned by the homeowner (e.g., financed separately with the panels as collateral), solar does not add to the appraisal value. This is because the panels can be repossessed or are not considered part of the property itself. The appraiser will still comment on the marketability of the home with solar panels, but they won’t include the panels’ value in the appraisal.
Understanding how solar impacts property value is key when buying or selling a home. Learn more about Freddie Mac’s guidelines on energy-efficient homes and solar panels here.
When assessing the solar appraisal value, appraisers typically look at how solar panels contribute to the overall value of a property. For homes with owned solar systems, appraisers will consider the potential energy savings and the increased marketability of the property due to its energy-efficient features. Homes with solar panels that reduce utility costs are seen as more desirable, particularly in markets where sustainability is a priority for buyers. Additionally, locations where electricity costs are rising or known to be high may make an owned solar asset increase the value of the property.
Solar Ownership
The key factor in determining the solar appraisal value is ownership. The panels are considered part of the property and their value can be reflected in the appraisal, if a homeowner has outright ownership of the solar panels or has financed them through a loan that is secured by the property. This can translate into a higher sales price or more favorable financing terms when selling the property.
Solar Lease
On the other hand, leased solar systems or those under a PPA are not treated the same way in an appraisal. Since the homeowner does not own the solar panels, the appraiser will not factor them into the home’s value. As a result, buyers may be less inclined to pay a premium for a home with a lease or PPA, as they won’t directly benefit from the energy savings or increased property value associated with ownership. Understanding these nuances can help homeowners make more informed decisions when it comes to solar investments and their long-term financial impact.
