With energy pricing being a significant expense for most, energy-efficient homes and features are gaining popularity with home buyers nationwide.
A National Association of Home Builders (NAHB) What Home Buyers Really Want study showed that 15% of home buyers would pay more for a home described as “environmentally friendly.” Further, 57% of home buyers would pay $5,000 or more above the home’s price for energy-efficient upgrades that would save them $1,000 a year in utility costs. And, of course, electricity plays a large role in the environment and utility bills.
So, whether you’re selling your home soon or planning to make upgrades, check out the energy-saving features buyers seek that could net you a strong return on investment (ROI).
Revamp your HVAC system
With space heating and cooling among most homes’ top three energy-consuming appliances, give your HVAC (heating, ventilation, and air conditioning) system special consideration. Is your current HVAC equipment getting old? You have a few options for making heating and air conditioning more efficient.
You could consider replacing it with an all-in-one electric air-source heat pump, which is more efficient and may use less energy than a traditional HVAC system. Plus, according to a study by Nature Energy, homes with an electric air-source heat pump enjoyed an average 4.3-7.1% price premium when sold.
You could also replace your HVAC components with more efficient machinery. For example, an ENERGY STAR®-rated air conditioner uses about 8% less energy than a conventional new model.
Or you could convert your HVAC system from fossil fuel to an electric heat pump (also known as HVAC electrification). This could yield a 66% ROI, according to national averages from Remodeling Magazine’s 2024 Cost vs. Value Report. That’s in addition to lowering your carbon footprint and any monthly savings on your cost of energy.
Install a heat pump water heater
Water heating accounts for about 18% of household electrical usage in an average U.S. home. Upgrading to a heat pump water heater can increase your home’s value by making it more energy efficient.
According to Energy.gov, an ENERGY STAR®-rated heat pump water heater is up to 4 times more efficient and uses 70% less energy than a standard model. It’s estimated that this type of water heater can save up to $550 in annual electricity costs for a family of four.
Update your windows
Upgrading to ENERGY STAR®-rated windows ranks as the #4 most-wanted feature in NAHB’s What Home Buyers Really Want list, with 39% of surveyed home buyers labeling them as “essential/must haves” and another 44% rating them as a “desirable” feature.
If your budget won’t allow you to make this upgrade, don’t despair. You can often fix drafty windows with insulation and by sealing air leaks, which is more economical and can still impress home buyers and their inspectors.
Insulate your attic
Properly insulating your attic (and sealing air leaks around doors and windows) can make your home more energy efficient. The U.S. Environmental Protection Agency (EPA) estimates that effective air sealing and insulation throughout a home can save homeowners 15% on heating and cooling costs. And Realtor.com lists attic insulation as an energy-efficiency improvement that offers one of the best returns on investment.
The amount of insulation your home needs depends on your local climate. Use this R-Value map and chart to determine how much insulation different areas of your home should have.
Consider adding solar panels
Rooftop solar can be a very attractive feature to potential home buyers for three big reasons.
First, any electricity generated by the home’s solar panels is energy that doesn’t have to be bought, reducing the monthly cost of energy.
Second, the “buyback” or “payback” plans from retailers like Green Mountain Energy and Reliant Energy, which give you bill credits for selling back any excess solar energy produced by your panels, is a favorable solar energy pricing model.
And third, using renewable energy helps lower the homeowner’s carbon footprint.
According to a Zillow study, installing solar panels has a large upfront cost, but homes with solar-energy systems sell for up to 4.1% more.
Upgrade your kitchen appliances
As the heart of many homes, a kitchen’s condition can make or break a real estate sale. An updated kitchen with ENERGY STAR®-rated appliances ranks in the Top 10 Most Wanted features in NAHB’s What Home Buyers Really Want list, with 33% of surveyed home buyers naming it an “essential/must have” and another 48% rating it as a “desirable” feature.
In addition to providing a sleek look, modern appliances are more energy-efficient than older models, resulting in lower energy costs for buyers. According to one estimate, upgraded kitchen appliances have an average ROI of 60-80%.
Don’t forget about the Energy Efficient Home Improvement Credit and rebates
The federal government offers up to $3,200 in tax credits annually for qualified energy-efficient home improvements made before January 1, 2033.
Qualifying expenses include insulation, exterior doors and windows, home energy audits by a qualified home energy auditor, central air conditioners, certain types of water heaters, electric or natural gas heat pumps and heat pump water heaters, and more. Find more details on the IRS page, Energy Efficient Home Improvement Credit.
Many ENERGY STAR®-rated appliances and electronics offer rebates, as well. If you purchase one of these appliances, make sure to check the ENERGY STAR® rebate finder so you don’t miss out on additional savings.
Find energy pricing, electricity providers, and more with Everything Energy
Not ready to make upgrades but still want to lower your monthly cost of energy? Try a new electricity plan from a trusted Texas electricity provider. Use our personalized search tools to narrow down your options, compare energy pricing between plans and sign up today.
Note: This article is for informational purposes only. It is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult a tax professional for details and advice on tax credits and eligibility.