Myth-Busting the Value of Solar Panels in Real Estate Sales

Homeowners reap significant savings from solar, often as much as mortgage costs. Why aren’t we telling them? 

Conventional wisdom in the real estate industry is that homeowners with solar panels will not see a return on their investment – ever. But agents should refuse to accept this and, instead, learn to market a home’s solar panels to prospective buyers not just around clean energy but around the significant cost savings – something that seems to be forgotten.

The Cycle of Misinformation

Agents are taught that solar panels have a 0% return from appraisers. Solar panels are not commonplace (yet) so it’s often an edge case when agents have to price a home with solar panels. Because there are relatively few properties to use as comps, agents turn to appraisers who educate them that “solar panels have a 0% return.” This is a self-perpetuating cycle because agents educate other agents on what they have learned, who then instruct sellers and buyers on other homes for sale: “Solar panels have zero value on a residential property.”

The Reality: Reduced Cost of Home Ownership

The reality is that solar panels significantly reduce a homeowner’s cost of home ownership. Yet the problem remains that agents focus too much on the cost to install the system, rather than the amount of money the system will save the homeowner. The cost to own a home not only consists of PITI (mortgage, taxes and insurance), but also energy, water and maintenance. Since solar panels reduce or eliminate a homeowner’s energy cost, they significantly reduce cost of ownership.

For example, one of our firm’s clients in Austin, TX, installed solar panels and their calculations are that they reduce cost of ownership by $400/month. This is a larger system than the average at 13kW, so this system has above-average results, but the average system in the United States should save consumers $67 to $323 per month, according to EnergySave.

Stop the Cycle with Accurate Calculations and Effective Marketing

An agent should ask themselves, how can I best market these solar panels? By converting energy into cost of ownership savings and converting cost savings into a mortgage equivalent.

Let’s consider our client’s home. Our brokerage, Bramlett Residential, serves the Austin, TX, market. The average home in Austin is roughly $650,000. The average home in Austin with a solar electric system similar to our client’s will have the cost of ownership of a $585,000 home. When mortgage rates go down (and we all hope they do) the comparable cost of ownership savings go up. On average, their solar panels will save $400 per month in energy costs. $400 per month at 6.5% is just under a $65,000 mortgage, so their solar panels will save the next buyer $65,000 in purchasing power. If/when mortgage rates drop to 4%, the cost savings are comparable to $85,000 in purchasing power, so lower rates means a greater cost of ownership savings!

Yet our brokerage recommends sellers price their solar-powered homes comparably to homes without solar. The reason is, while the value is clearly there, the education to the broader market is not – yet. We recommend that, instead, agents highlight the cost savings in the marketing remarks that are syndicated across all real estate portals.

Our solar marketing package includes a PDF that highlights the solar home and the cost savings, along with the calculations that get us to those savings. We upload that PDF to the MLS and mention it in agent remarks. We also leave a hard copy at the home and include a digital copy in the listing photos online.

At our brokerage, we have leveraged these steps to get multiple offers and sold prices far above asking. By appealing to the buyer’s wallet, it becomes more palatable for the person to pay a higher price when the baked-in cost savings from solar panels have been well communicated.

Marketing Solar Cost Savings Must Become Commonplace

As weather becomes more severe across the United States and electrical grids more vulnerable, interest in solar power will continue to rise amongst consumers. This is an opportunity for brokerages to adopt these marketing strategies and commit to making them commonplace so that buyers understand and accept not only the significant cost savings, but also the opportunity to tap a clean energy source.

Eric Bramlett
Eric Bramlett is the owner of Bramlett Residential, a top performing real estate brokerage in Austin, Texas. Widely regarded as an industry innovator, Eric has developed new systems and proprietary technologies to help his agents gain efficiencies and become industry leaders. Eric is a multi-year Austin Business Journal Residential Real Estate award winner and has career production in the top 1% of agents in the United States.

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