Are Solar Panels Included in Home Appraisals?

Yes, solar panels are included in home appraisals when you own them, and they generally raise the appraised value; leased panels and those tied to a power purchase agreement are excluded because they belong to the solar company rather than to the home. So the real question behind “are solar panels included in home appraisals” is which category your system falls into, and what paperwork you can hand the appraiser to back up the number. Zillow’s analysis of 2018–2019 sales found solar-equipped homes sold for about 4.1% more than comparable homes without panels.1Zillow Research. Homes With Solar Panels Sell for 4.1% More A Lawrence Berkeley National Laboratory study put the premium at roughly $5.50 per installed watt, or about $15,000 to $17,000 for an average-sized system.2Lawrence Berkeley National Laboratory. An Analysis of the Effects of Residential Photovoltaic Energy Systems on Home Sales Prices

Owned Panels Count, Leased Panels Do Not

The single biggest factor is who owns the equipment. If you bought the system outright or financed it with a standard solar loan, the panels are part of the real estate, transfer to the buyer at closing, and the appraiser can adjust the home’s value upward to reflect them.

Under a solar lease or power purchase agreement, a third-party company owns, operates, and maintains the system, and you buy the electricity it produces.3US EPA. Solar Power Purchase Agreements Because the panels belong to the solar company, the appraiser treats them as personal property and leaves them out of the home’s value. Fannie Mae’s selling guide makes the point explicit: separately financed solar panels must not contribute to the appraised value unless the financing documents confirm the panels cannot be repossessed if the borrower defaults.4Fannie Mae. Special Property Eligibility Considerations

What Mortgage Programs Require

The appraisal doesn’t exist in a vacuum. Your buyer’s loan program sets the rules the appraiser has to follow, and all three major programs treat leased equipment the same way: it is excluded from value.

  • FHA. The appraised value cannot include equipment the borrower does not fully own, including leased panels. The lender also reviews the lease terms to confirm they do not restrict transferring the property to a new buyer. For owned systems, FHA appraisers describe the installation in the improvements section of the report and adjust the sales comparison grid when the market supports it.5HUD. FHA Single Family Housing Policy Handbook 4000.16HUD. FHA Single Family Housing Appraisal Report and Data Delivery Guide
  • VA. VA purchase loans can cover energy-efficiency improvements including solar, and the sale price cannot exceed the appraised value, so how the appraiser treats the system directly affects how much the buyer can borrow.7Veterans Affairs. Purchase Loan
  • Conventional (Fannie Mae). Owned panels can contribute to value. Financed panels covered by a UCC fixture filing can also contribute, provided the lender has reviewed the filing and confirmed it does not block the sale. Leased panels are excluded.4Fannie Mae. Special Property Eligibility Considerations

How Much Value Panels Typically Add

On a $400,000 home, the Zillow 4.1% figure translates to roughly $16,400.1Zillow Research. Homes With Solar Panels Sell for 4.1% More The Berkeley Lab premium of about $5.50 per installed watt produces a similar range for a typical system.2Lawrence Berkeley National Laboratory. An Analysis of the Effects of Residential Photovoltaic Energy Systems on Home Sales Prices

These are national averages. The premium runs higher in areas with expensive electricity, strong sun, and active solar markets. It shrinks for older systems nearing the end of their warranty period, in areas with low utility rates, and for anything other than an outright-owned system.

How Appraisers Put a Dollar Figure on Your System

Appraisers use three standard approaches, and most will combine them depending on what data the local market offers.

Sales Comparison

The preferred method when data exists. The appraiser compares recent sales of similar homes with solar to similar homes without, and the price gap sets the premium. In active solar markets this produces the most reliable number because it reflects what buyers actually paid.

Cost

When comparable solar sales are scarce, the appraiser calculates the cost to install an equivalent new system and subtracts depreciation for age and condition. The U.S. Department of Energy benchmarks the modeled market price for a residential system at roughly $3.15 per watt, though actual installed prices have run closer to $2.50 per watt in recent conditions.8Department of Energy. Solar Photovoltaic System Cost Benchmarks For a typical 8-kilowatt system, the replacement baseline lands between $20,000 and $25,200 before depreciation.

Income

The appraiser projects the electricity savings the system will produce over its remaining useful life, typically 20 to 25 years for modern panels, then discounts those future savings to a present value. The PV Value tool, originally developed by Sandia National Laboratories, is widely used for this calculation.

System Features That Move the Number

Not every installation is appraised at the same figure, even for the same wattage. Several characteristics push the valuation up or down.

Efficiency and age. Higher-efficiency panels generate more electricity per square foot and support a stronger valuation. Older panels with efficiency ratings below current standards face a larger depreciation hit under the cost approach, because a buyer could install better equipment for similar money.

Orientation. South-facing panels in the Northern Hemisphere produce the most consistent output. East- or west-facing arrays generate less, especially during peak afternoon hours when rates are highest, and the income approach reflects that.

Roof condition. Panels on a roof that needs replacement within a few years create a known future cost: removal, re-roofing, and reinstallation can run several thousand dollars. Appraisers discount for this. A newer roof with 15 or more years of life left eliminates the concern.

Warranty transferability. Most manufacturers offer warranties that transfer to a new owner, often with 25-year performance guarantees. A transferable warranty with meaningful coverage remaining reduces the buyer’s risk and supports a higher appraised value. Confirm the transfer process with your manufacturer or installer before listing, since some require paperwork.

Documents to Give the Appraiser

Appraisers work with what they have in front of them. Assemble a packet and provide it early enough that the inspector uses it on-site rather than chasing details afterward:

  • The installation contract, showing system size in kilowatts, panel brand and model, inverter type, and total cost paid.
  • The interconnection agreement with your utility.
  • Twelve months of utility bills from before and after installation, so the appraiser can see actual savings.
  • Manufacturer and installer warranty documents, with confirmation of whether they transfer.
  • Proof of ownership. If you financed, include a payoff statement or a UCC termination showing the lien has been cleared.

Fannie Mae offers an optional addendum to its standard appraisal form (Form 1004) that gives the appraiser space to describe green features, record energy savings data, and document third-party certifications. It is not required, but it puts your system’s value into a format underwriters recognize. Ask whether your appraiser has access to the form.

UCC Filings and Clearing Liens Before Closing

When solar panels are financed, the lender typically files a UCC-1 financing statement, a public notice establishing a security interest in the panels. A standard UCC-1 is filed with the state and covers the panels as personal property. A fixture filing is a special type recorded in the county land records against your property’s legal description, and it appears in a title search.

Either type can complicate a sale. Mortgage lenders and title companies generally require the UCC to be resolved before closing. If the loan is paid off, contact the lender and request a UCC termination so the lien is formally released. If the loan is still active, coordinate a payoff and release timed to your closing. Fannie Mae requires the lender to obtain and review any UCC fixture filing to confirm it does not block transferring clear title.4Fannie Mae. Special Property Eligibility Considerations

If Your Panels Are Leased or on a PPA

Leased systems and PPAs will not add to the appraisal, but you have two paths at sale. You can transfer the agreement to the buyer, which most contracts allow if the buyer meets the solar company’s credit requirements. Review your contract for the transfer process and any fees before listing. Or you can buy out the agreement, which converts the panels to owned equipment that can be included in the sale and the appraisal. Most contracts include a buyout provision, with the price depending on where you are in the term.

Either path needs to be sorted well before closing. Buyers and their lenders will want to know whether the panels convey with the property or stay with the solar company. If transferring, give the buyer a copy of the contract, the remaining payment schedule, and any escalation clauses. If buying out, confirm the payoff amount and timeline with your provider so the buyout is complete before the appraiser visits.

A Higher Appraisal Doesn’t Automatically Raise Your Property Tax

More than 35 states offer some form of property tax exemption or exclusion for residential solar, meaning the added value of the panels is not included when your local tax assessor calculates your annual tax. Rules vary. Some states exclude the full system value permanently, others cap the exclusion at a dollar amount, and a few limit the benefit to a set number of years. Check with your county assessor, because some exemptions require an application rather than being applied automatically.