The Challenge of Solar Panels in Texas Home Appraisals: What Sellers Need to Know

Solar panels are increasingly popular across Texas, promising lower energy bills and environmental benefits. However, when it comes time to sell, many homeowners are surprised to learn that solar panels do not always translate into higher appraised value — and often, they can actually complicate a transaction.

Understanding how appraisers view solar systems in Texas can help sellers avoid pricing mistakes, appraisal gaps, and last-minute deal stress.

At Zest, we have seen a huge disparity over the years in how appraisers deal with solar.  At solar's infancy, they were given general guidelines which left a lot to the appraiser's discretion.  Ten years ago, we had a seller receive almost full value ($35,000) for their nearly new and fully paid off solar panels.  However, we have never seen that again.  Four years ago, we had a home with panels only a few years old with an existing loan earn only $7,000 in additional value (when the original cost was $37,000) and even more recently, the appraiser granted no value for the panels. Much depends on if the appraiser is able to find comparable properties with solar.

Other considerations are: the cost to remove and re-install after a roof replacement (a client was recently quoted $10,000 for this service on a home with 20 panels) and the cost of paying for additional homeowners' insurance to cover the panels (varies but will increase premiums by a few hundred dollars a year).

Read on to see more:

 

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Why Solar Panels Don’t Automatically Increase Appraised Value

Unlike kitchen upgrades or additional square footage, solar panels are treated differently in residential appraisals. Appraisers must rely on market-supported data, and in many Texas markets, that data is limited or inconsistent.

Key reasons solar panels may add little or no appraised value include:

• Lack of comparable sales with owned solar systems

• Wide variation in system age, size, and efficiency

• Difficulty quantifying long-term savings for the next buyer

• Rapidly changing solar technology, which can lead to depreciation

In short, if buyers in the neighborhood aren’t consistently paying more for solar-equipped homes, appraisers are limited in how much value they can assign — regardless of installation cost.

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Owned vs. Leased Solar Panels: A Major Appraisal Difference

Owned Solar Panels

Owned systems (paid in full, no lien) are typically considered a fixture and may contribute value — but only if supported by comparable sales.

Even then, appraisers often:

• Apply partial contributory value

• Use income or cost approaches cautiously

• Discount older or less efficient systems

Leased or Financed Solar Panels

Leased systems are one of the biggest appraisal and transaction challenges in Texas.

Common issues include:

• Solar panels treated as personal property, not real property

• Existing UCC filings or liens that must be resolved prior to closing because financing will not transfer to new owner

• Lenders/Title companies requiring leases to be paid off prior to closing

In many cases, leased panels add zero appraised value and can delay or derail financing altogether.

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How Texas Appraisers Are Required to Handle Solar

Most Texas appraisers follow Fannie Mae, Freddie Mac, FHA, and VA guidelines, which emphasize:

• Ownership verification

• Market reaction (not installation cost)

• Avoiding unsupported adjustments

• Excluding leased systems from value

Appraisers may reference tools like PV Value®, but only when adequate data is available — which is still limited in many Texas neighborhoods.

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Regional Market Reality: Texas Is Not California

In states like California, solar adoption is widespread and consistently reflected in sales data. Texas markets — including San Antonio, New Braunfels, Austin suburbs, Corpus Christi and much of South Texas — vary dramatically.

In many areas:

• Buyers expect low electric bills already when compared to other parts of the country

• Energy savings alone don’t justify higher prices

• Solar is viewed as a bonus, not a premium feature

This creates a disconnect between seller expectations and appraisal reality.

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When Appraisers do give value for Solar - What is a Typical Value Increase (as % of Home Price)

General U.S. & Texas Trends

• Homes with owned solar panels tend to sell for about 3%–7% more than similar homes without solar.

• A common average estimate is around ~4% increase in resale value for homes with solar.

• Some data specific to Texas suggests a similar increase — roughly about 4% of home value.

Example Illustration

• If a South Texas house is worth $400,000, a 4% value bump from solar panels could mean roughly $16,000 added to the sale price.

• In some specific studies (e.g., Zillow/Texas data), solar homes in Texas were observed selling for about $18,000 more than comparable homes without solar — roughly 5–7% on some properties.

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Common Appraisal & Contract Issues Caused by Solar Panels

• Appraisal comes in below contract price

• Buyer’s lender refuses to count solar toward value

• Solar lien must be paid off unexpectedly

• Buyer requests seller concessions to offset solar cost

• Delays while ownership documentation is verified

These issues are especially common in shifted or buyer-leaning markets, where buyers are more price-sensitive.

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Smart Strategies for Texas Sellers With Solar Panels

If you’re selling a home with solar in Texas, preparation is critical:

✔ Before Listing

• Confirm whether the system is owned, financed, or leased

• Gather documentation: contracts, payoff statements, warranties

• Understand remaining lien balances

• Avoid pricing the home based solely on solar installation cost

✔ During Marketing

• Highlight average utility savings, not “added value”

• Emphasize ownership status clearly

• Be transparent — surprises hurt deals

✔ During Negotiation

• Be prepared for limited or zero appraisal adjustment

• Consider paying off solar at closing if leased or financed

• Work with an agent experienced in solar-related transactions

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The Bottom Line

Solar panels can absolutely be a selling feature — but in San Antonio, New Braunfels and Corpus Christi, they are not guaranteed to increase appraised value. Ownership structure, market data, lender guidelines, and buyer perception all play a role.

Sellers who understand these realities early can price more accurately, reduce appraisal risk, and keep transactions on track.

Buyers who understand the benefits and risks can avoid overpaying for a home and can budget for additional costs beyond the savings of having them.

****It is important to check with your realtor before making ANY major upgrade to see how will impact your home's value when you consider resale.  None of us know what is around the next corner, so it is best not to make a choice you may regret later!!!

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