Solar panels cover roofs all over the Bay Area. Drive through Berkeley, Oakland, or Alameda and you'll see them on Victorians, mid century ranches, and new construction alike. But when it comes time to sell or buy a home with solar, the value question gets complicated fast.
I've represented both buyers and sellers dealing with solar installations, and the impact on home value depends almost entirely on one factor: whether the panels are owned or leased. That distinction matters more than anything else.
Owned Solar Panels Generally Add Value
When solar panels are fully owned with no liens or lease agreements attached, they typically add value to a home. Studies suggest homes with owned solar sell for 3% to 4% more than comparable homes without solar.
In the Inner East Bay where median home prices sit around $1,250,000, that translates to roughly $37,500 to $50,000 in additional value. Not insignificant, especially considering the panels also reduce monthly utility costs.
Buyers appreciate owned solar for practical reasons. Lower electricity bills matter, particularly as PG&E rates keep climbing. The environmental appeal factors in too, though I'd say the financial benefit drives most buyer interest. People like the idea of renewable energy, but they really like the idea of smaller utility bills.
Leased Solar Panels Can Complicate Sales
Leased solar panels present a different situation entirely. A solar company owns the equipment, and the homeowner pays a monthly lease payment, often with annual escalators built in.
Selling a home with leased solar means transferring that lease obligation to the buyer. Not all buyers want to take on a 15 or 20 year lease commitment with escalating payments.
I've watched deals nearly fall apart over leased solar. Buyers get excited about a home, then discover the $150 monthly solar lease that increases 2.9% annually. They start calculating what that payment becomes over the remaining lease term and get uncomfortable. The enthusiasm just drains out of the room.
Some solar leases allow buyers to purchase the system outright during the home sale, but the buyout amount can be substantial. I recently worked on a transaction where the buyout was $28,000 with 12 years remaining. The sellers ended up paying half to make the deal work.
Power Purchase Agreements operate similarly but homeowners pay for the actual electricity the panels produce. PPAs create the same transfer issues as leases.
The Appraisal Challenge
Here's where owned solar value gets murky. While studies show premium sale prices, appraisers often struggle to assign specific value to solar installations.
In neighborhoods where solar is common, finding comparable sales becomes easier. Where it's less prevalent, appraisers may not add significant value because the data doesn't support it.
This creates situations where a seller invests $30,000 in owned solar but the appraiser adds only $10,000 or $15,000 to the home's value. I've seen this disappoint more than a few sellers.
I always tell sellers considering solar that they should install it because they want lower energy bills, not because they're counting on full value recovery at sale. Think of it as a quality of life upgrade that happens to add some resale value.
Age and Condition Matter
A five year old solar system appeals to buyers more than a 15 year old system that might need panel replacement soon. Solar panels typically last 25 to 30 years, but efficiency decreases over time.
Buyers want to know about panel age, warranty coverage, and whether the roof underneath needs work. Removing panels to replace a roof adds significant cost. Nobody wants to inherit that headache.
I recently represented a buyer who loved a home but discovered the solar panels were 18 years old and the roof needed replacement within a few years. The sellers reduced the price by $15,000 to account for the future expense.
What Sellers Should Know
If you're considering installing solar before selling, run the numbers carefully. Installing owned solar three to five years before selling makes more sense than installing it six months before listing. The longer you live with the system, the more you benefit.
Avoid solar leases or PPAs if you're planning to sell within a few years. The transfer requirement creates friction that can cost you more in negotiation than you saved on electricity.
Keep all documentation: installation contracts, warranties, production data, utility bill comparisons, maintenance records. Having it organized makes your home more attractive.
What Buyers Should Evaluate
First determine whether the panels are owned, leased, or under a PPA. This fundamentally changes the value equation.
For owned solar, ask about system age, warranty coverage, and production history. Request utility bills showing actual savings.
For leased solar or PPAs, get complete contract details including remaining term, monthly payment, and escalation clauses. Calculate total payments and compare that to what you'd pay PG&E. Sometimes the math doesn't work out the way you'd expect.
Don't assume solar automatically means lower housing costs.
The Bottom Line
Owned solar panels generally add value to California homes. The value add rarely matches the full installation cost, but it's real and measurable.
Leased solar and PPAs complicate transactions and may not add value at all. The transfer requirement can deter buyers or become negotiation points that reduce your net proceeds.
The clearer the financial picture, the smoother the transaction. Every single time.
Kelly
