SOURCE: Chief Appraiser Knowledge Base — Solar PV Systems: Real Property vs.
Personal Property, and How Appraisers Are Required to Value Them
Compiled from: Fannie Mae Selling Guide B4-1.3-05 (Improvements Section of
the Appraisal Report) and B2-3-04 (Special Property Eligibility
Considerations), plus Fannie Mae's own "Appraising Properties with Solar
Panels" reference (Nov. 2024); Freddie Mac Single-Family Seller/Servicer
Guide Section 5601.4; HUD/FHA Single Family Housing Policy Handbook 4000.1,
Special Energy-Related Building Components; VA Lenders Handbook (Pamphlet
26-7 / M26-7), Chapter 12, Topic 24; Fannie Mae UAD 3.6 / new URAR, Energy
Efficient & Green Features section; Lawrence Berkeley National Laboratory,
"Appraising into the Sun: Six-State Solar Home Paired-Sales Analysis" (Hoen
et al.)
Last reviewed: August 2026
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Solar PV Systems: Real Property vs. Personal Property, and How Value Is
Determined

The single most important fact about a solar photovoltaic system on a house
for sale is not how new it is, how efficient it is, or what it cost to
install. It's who owns it. Every major loan guarantor — Fannie Mae, Freddie
Mac, FHA, and VA — draws the same line: an owned system can be treated as
part of the real estate and can contribute to the appraised value, while a
leased system or one under a power purchase agreement (PPA) is legally
personal property and must be excluded from the appraised value entirely,
no matter how it looks bolted to the roof.

The four ownership and financing structures.

Fannie Mae's own solar guidance identifies four distinct structures a solar
system can sit in, and each is treated differently by an appraiser:

Owned outright — a cash purchase, or a system bought with ordinary consumer
debt that is not collateralized by the panels themselves and is paid off.
The appraiser may include the panels' contributory value based on standard
appraisal requirements.

Financed as a fixture to the real estate — the loan is secured by the real
property itself, not by the panels as separate collateral, and the
financing terms do not allow the lender to repossess the panels on default.
The appraiser may still consider the panels in the property's value.

Financed as personal property — the panels themselves are the collateral
for a separate loan, distinct from the mortgage. Because the panels can be
repossessed independently of the house, the appraiser may not give them
contributory value.

Leased, or covered by a power purchase agreement — the homeowner doesn't
own the equipment at all; they're paying to use it (a lease) or paying for
the electricity it produces (a PPA). The panels must be excluded from the
appraised value in every case.

If the ownership structure can't be documented clearly, Fannie Mae's rule is
unambiguous: no value may be attributed to the panels unless the lender
obtains a UCC "personal property" search confirming the panels are not
claimed as collateral by any non-mortgage lender. The burden is on
documentation, not on the appearance of the installation.

Freddie Mac's parallel rule.

Freddie Mac's Single-Family Seller/Servicer Guide, Section 5601.4, draws the
same owned-versus-leased line: a system owned free and clear, or financed
through a loan secured to the real estate as a fixture, can be credited in
the appraisal; a leased system or one under a PPA is personal property and
is excluded, regardless of how the lease payments are treated elsewhere in
underwriting.

FHA's treatment.

FHA's Single Family Housing Policy Handbook 4000.1 addresses solar
installations under its Special Energy-Related Building Components
provisions. The same ownership logic applies: an owned system can contribute
to value if the market supports it; a leased or PPA system is treated as
personal property and excluded from the collateral value used to support
the loan. As with Fannie Mae and Freddie Mac, it is the lender's
responsibility to establish the ownership documentation the appraiser relies
on.

VA's treatment.

The VA Lenders Handbook (M26-7), Chapter 12, Topic 24, states plainly that
no value may be given to leased equipment, including leased solar systems.
A VA appraiser identifies leased items present on the property and notes
whether removing them would have a detrimental effect on the property, but
does not add their value to the appraisal. Establishing whether panels are
leased, financed, or owned is the lender's responsibility rather than the
appraiser's, though the appraiser still has to flag what's actually
installed.

How ownership actually gets verified.

Because the financial and legal structure — not the physical installation —
is what controls, verifying ownership means looking at paperwork, not the
roof. In practice this means checking for a recorded UCC-1 financing
statement (a public record showing whether the panels are pledged as
collateral separate from the mortgage), reviewing the actual solar
purchase, lease, or PPA agreement for language about whether the equipment
can be repossessed on default, and confirming with the lender or title
company whether a personal-property search has been run. A system that
"looks" permanently installed can still be excluded from value if it's
leased; a system that looks the same can still count toward value if it's
paid off. The paperwork is the only reliable answer.

The new URAR's Energy Efficient & Green Features section.

Fannie Mae's UAD 3.6 update, which the new Uniform Residential Appraisal
Report is built around, adds a dedicated Energy Efficient & Green Features
section that captures solar-related data as its own structured field —
including whether the system is owned or leased — rather than burying it in
general improvements commentary the way older report forms did. That
mandatory reporting standard reinforces, at the form level, exactly the
distinction described above: ownership status has to be disclosed and
documented, not inferred.

Cost is not value — and this is where appraisers and real estate agents
have to draw the same line for different reasons.

Even for an owned system that's eligible to be counted, Fannie Mae's own
guidance is explicit that an appraiser may not adjust value on a mechanical
dollar-for-dollar basis using the equipment and installation cost, and may
not rely solely on the cost approach or the discounted present value of
expected utility savings. The appraiser must analyze the market's actual
reaction to the feature — in practice, this usually means a paired-sales or
matched-pairs analysis: comparing sales of similar homes with an owned solar
system against sales of similar homes without one, in the same market, to
extract what buyers are actually paying for it. Lawrence Berkeley National
Laboratory's peer-reviewed "Appraising into the Sun" study is the leading
public research supporting this method, and found that paired-sales results
and cost/income-based estimates tend to converge when both are done
carefully — but the guidance is clear that cost and income approaches can
only support a market-based adjustment, never substitute for one.

What this means for appraisers.

Before assigning any value to a solar installation, confirm ownership
documentation exists and is unambiguous — don't assume based on appearance.
Where value is supported, build the adjustment from paired sales in the
local market wherever comparable data exists, using cost or income evidence
only as a supplement, never as the sole basis. Document the ownership
status explicitly in the Energy Efficient & Green Features section as UAD
3.6 requires, and note leased or PPA systems as personal property present on
the property without folding their value into the sales comparison grid.

If a battery is also installed.

Home battery storage is increasingly sold alongside solar panels, and the
same ownership-based rule described above governs a battery exactly the way
it governs the panels themselves: an owned or fixture-financed battery can
be considered for contributory value under the same standard appraisal
requirements, while a leased battery or one tied to a separate financing
agreement that allows repossession is personal property and must be
excluded, regardless of how permanently it appears to be wired into the
home's electrical system. The practical complication is that battery
attachment to solar systems is newer than solar panels themselves, and
because far fewer home sales involve a confirmed owned battery than involve
confirmed owned panels, the paired-sales market data an appraiser or agent
would need to isolate a battery's own distinct contribution to price is
considerably thinner than the data available for panels alone. That doesn't
change the ownership rule — it just means an appraiser is more likely to
find solid market support for a solar panel adjustment than for a
battery-specific one in most markets today, and an agent should set
expectations with a seller accordingly rather than assuming a battery adds
a comparable, well-documented premium the way an owned solar array
increasingly does.

What this means for real estate agents preparing a listing.

Determining whether solar panels add value to a specific house, and by how
much, is appraisal work — a real estate agent should not represent to a
seller or buyer what an appraiser will conclude, and Chief Appraiser
deliberately doesn't publish typical dollar or percentage premiums here for
that same reason. What an agent can do, and can do well before an appraiser
ever gets involved, is find out which of the four ownership structures above
actually applies — ask the seller directly whether the system is paid off,
financed, leased, or under a PPA, and ask to see the actual agreement — so
that pricing conversations start from an accurate premise instead of an
assumption. An agent can also apply the same paired-sales logic described
above to their own market knowledge during a listing presentation: pulling
recent comparable sales in the immediate market, some with owned solar and
some without, to see what the data in that specific neighborhood actually
shows, the same technique the appraisal profession itself relies on. That's
market research an agent is well positioned to do with their own MLS access
and comp selection — it just isn't, and shouldn't be presented as, an
appraisal or a substitute for one.

Practical checklist.

Ask the seller directly: is the system paid off, separately financed, or
under a lease or PPA? Ask to see the actual agreement rather than relying on
a verbal answer. If financed, ask whether the financing is secured by the
real estate as a fixture or by the panels themselves as separate collateral
— the agreement's default and repossession language controls this, not how
the system looks installed. Flag leased and PPA systems clearly to buyers
early, since those payments typically transfer with the property and affect
the buyer's own qualifying math even though they don't add appraised value.
For owned systems, pull comparable sales with and without solar in the same
market before quoting a price expectation, rather than assuming a flat
premium. Where a battery is present alongside the panels, confirm its
ownership structure separately, since a battery is sometimes financed or
leased differently from the panels even when both were installed on the
same day by the same contractor — one can be owned while the other is
leased, and each is evaluated on its own paperwork.