3 Energy-Conservation Upgrades That Can Increase Home Value

Whether you’re looking to sell your home or just make smart choices as you renovate, there are plenty of energy-saving upgrades that can add value to your home. But it pays to make these decisions wisely, and not every upgrade translates to a financial return on investment. 

“It will make your house more marketable when you go to list it,” says Lisa Lundt, a sales associate with Better Homes & Gardens Real Estate Universal in Henderson, Nevada.

Here, real estate experts share advice on which energy-conserving upgrades increase home value. 

1. Alternative Energy

Why not harness the power of the sun to reduce your utility bill and appeal to future home buyers? 

“Solar panels can reduce the amount of electricity that a home uses and thus reduce the cost of electricity that the homeowners have to pay a utility company,” says Steve Ingels, a realtor with Better Homes & Gardens Real Estate Haven Properties in San Luis Obispo, California. “Of course, those homes have to be in an area that is conducive to receiving the correct amount of sunlight. If the home in question is located in the right area it is very possible that this can help the home sell for a higher price.” 

As solar energy becomes more mainstream for residential applications, markets such as Nevada are seeing more and more homes adopt this system. Lundt says that appraisers in her area will typically add about $20,000 to the value of a home that has solar panels installed. 

“To install them costs probably twice as much, but there’s a great tax incentive,” Lundt says. “A lot of people put them in and reap the benefits of them if they own the panels.” 

These upgrades cost a lot up front and can therefore take years to translate to a return for homeowners who plan to stay in place for a long time. But there are also tax incentives for making the leap. “There’s a federal tax incentive that does offset probably by a third the cost of the installation,” Lundt says. 

In other parts of the country, wind power or geothermal energy might be options as well. “Geothermal heating systems also can be an advantage if the home is in an area where geothermal heating is possible,” Ingels says. “This may help a home be more valuable than a less energy efficient home.” 

2. Water Conservation

Saving water starts with usage, but there are a few features that can help, too. “Low-flow fixtures such as toilets and faucets save people money because those fixtures reduce the amount of water used in a home and they also reduce the amount of water used that has to be treated by local communities and the water treatment plants that those communities use to treat the wastewater,” Ingels says.  

While we can all try turning off the faucet while brushing our teeth, perhaps the biggest drain on our water bills is our yards. “The water company gives you a rebate if you replace your grass with desert landscaping or xeriscape landscaping,” Lundt says. In Henderson, that includes a $5 per square foot rebate for replaced landscaping.

The right irrigation systems and landscaping can save hundreds on your water bills and reap a good return on investment. In fact, Lundt says the biggest ROI she sees in home upgrades in general is on changes made to home exteriors. Think fresh paint, driveway facelifts, and patio features. “Anything you put outside, you’re going to get a dollar-for-dollar return on your investment when you sell your house,” she says. 

In states like Nevada, where Lundt works, water is a hot topic and the local government incentivizes homeowners to make landscaping upgrades that require less water to maintain. “Water usage is less of a problem in the house because all of that water gets recycled,” she says. 

If you’ve already made these changes to your home, chances are you’re benefiting from the tax incentive, the use of less water, and the potential ROI down the road when you sell. That’s because prospective buyers will love that the landscaping upgrade has been tackled for them. 

And even if you don’t live in an area that’s dealing with water shortages, Ingels says other water upgrades can increase your home value. “Gray-water recycling systems help people by reusing the wastewater for outdoor landscaping and can also help people save money because they use less water from the local municipality to treat the wastewater,” he says. 

3. Using The Best Systems

While you might think of energy upgrades as being smart, high-tech changes to a home’s systems, that’s not always the case. In fact, just having newer appliances and core systems can make a world of difference in your home. 

“New HVAC systems, such as electric mini-split heaters and other types of electric heating units, are much more efficient and thus help save money on utility bills,” says Ingels. “Newer and more efficient appliances such as stoves, refrigerators, washing machines, and dryers save money over the long term. Newer water heaters also save money because they use less electricity, natural gas, or propane gas."

Lundt suggests paying attention to your HVAC systems, meaning heating, ventilation and air conditioning systems. Having a furnace or hot water tank that runs efficiently will not only save you money while living in your home, but it's also a prized feature among potential buyers. 

Finally, while most smart home upgrades can be removed, Lundt says some can add value to the home if you leave them behind. That goes for smart thermostats, which adjust the temperature based on whether or not you're home, and other smart home alert systems that can detect issues like water leaks.

Increasing Your Home's Value with Energy Savings

It’s important to keep in mind that these energy-saving upgrades won’t translate dollar for dollar when it comes to selling your home. While Lundt says that many outdoor upgrades will get you a solid ROI, other changes you make to your home such as that smart thermostat won’t necessarily change the listing price. 

Instead, you’re likely to see less tangible returns on your investment—returns that Lundt says are sometimes even more valuable. “Here's my opinion: It doesn't actually increase the value of the house, per se, but it makes the house more valuable compared to a house that doesn't have those improvements,” she says. “It will make your house sell faster, and that’s money in your pocket.” 

If you’re wondering about whether to invest in some of these upgrades, don’t do it simply to make money when you sell. Lundt suggests making upgrades that make sense for you while you’re living there. Eventually, your home will sell whether or not it has every energy-saving feature on the market. “The houses that are selling are the ones that are in peak condition, the ones that are actually move-in ready, and anything else is going to sit on the market,” she says.