Today's Buyers Ought to Know series is, “Should I buy a house next to power lines?” You’ll probably be surprised at the answer, but not really once we discuss how we sorta get there. It's pretty common in real estate that the house you want is just out of your budget. How do we get the house that you want in your budget? Well, one of the ways that you can do that is you buy a property that has an impacted location. Now, what's interesting about impacted locations is, there's a ton of them. A lot of people think there's just one type. No! There's, I mean, I have some listed here, but there's another two dozen that I could probably list that probably are less recognizable about the kinds of impacts that you can have.
The short version is all properties that have an impacted location are going to be impacted with what the market thinks they're worth. And ultimately one of my job's is to try and figure out how much (the impact is) so that you're not overpaying or not trying to get a discount, that's not going to happen. So, just to review the list, the types of impacted properties could be: properties that are right next to the power lines. And, of course, I'm not talking about telephone poles, I’m talking about high tension lines, right? Where you look at it and It looks like it's out of a zombie movie right? Like it's just- people don't like looking at ‘em, and, some people worry that they have health effects, although science on that suggests, that's not really a thing. But people believe what they wanna believe, and what they believe is, they don't want to live next to power lines. They pay less for those houses. That's a fact. Okay. So what about railroad properties, if you had a railroad in your backyard that property is not going to sell for the same (amount). Now, there's a big difference, if it's an old Spur Line that only runs once or twice a week, vs. the commuter rail, right? So just because it's a railroad property, you can't make assessments about how it's going to …you can't make assumptions about how much it's going to get impacted just because it’s next to a railroad. It depends on the railroad! There's a difference in how the markets going to look at (each of those). Highway properties are the same kind of thing. They're people that have around here 495 or the Mass Pike in their backyard. This is not uncommon, it happens all the time where people live on 85 or 30, or 20, or any of the other state highways. Some state highways are so big, they're just like interstates. But how close are you to the road? How much is the noise? Is there any kind of noise barrier or visual barrier between you and these locations? All of these things ultimately change what kind of discount you should probably be seeking right?
And steep slopes, and I don't mean like a little sledding grade. I mean, like a deep slope. Like holy cow. Great. There's a ton of these properties with modern technology, you can build a house anywhere! It doesn't have to be on flat ground. Some houses have driveways where they have switchbacks you go up, but then you do what u-turn and then you go back up to another u-turn. I mean, I've seen some crazy stuff but what I know is that house does get the same money asa home with a flat lot. There's just fewer people who are interested in the house, but at some point they get interested in the value that the house provides at a certain price point. So a lot of people say, well, I would never live in a powerline house and house and I say,
“Well, what if the house was one dollar?”
“Oh, well then I would do it.”
You know, we all have a number where it works, right? And so, the market has a number for where it starts to make sense to more people than it stops, that it doesn't make sense to. I mean, that's what it's about. There are lots of neighborhood properties that have almost no backyard, either again because of steep slope. Sometimes there's Wetlands back there. You literally have like 5 or 10 feet of a backyard. The lot can be bigger, but what you own is not usable in any way, shape, or form. So functionally, you have no backyard, Tthat impacts the property, the price of the property.
If you're in a neighborhood, it's a significant discount. And then there's another one on here that I have just called abutting a zoning change. So if you're in a residential area, when you're right next to a commercial area that tends to affect the price that you can get. There's all sorts of “right next to a commercial area”. Sometimes you can't even tell that the zoning line is there. Sometimes you can tell! Right? Like here next to it, there’s a trucking depot, the trucks are all outside and it looks - not so great. That's going to have an impact. The greater the visual impact between your property and the property next door, the less it feels -Wonderful - The more of a discount you're going to get there. That's just how it is. But no matter the impact, ultimately you have to ask yourself two questions. The first is, does this bother me? Most of the people that end up buying impacted properties, the impact doesn't bother them very much if at all. So most people that buy a house next door, Highway will tell you honestly, it was never as bad as we thought it was going to be, but at the time, they bought the property, they were very worried about it. The good news is most of the time these impacts are much bigger, at purchase time. Then they are actually having to deal with it. I mean, that's good news if you're like, worried about it, right? But at the end of the day, you still have to be careful price wise because at purchase time, not just when you purchase but when someone else purchases it later, there's going to be a price impact. I mean if you’re there long enough I guess it doesn’t matter a ton,, but for a lot of these properties, it's not uncommon to see them sell at a 20% discount. So it's a six hundred thousand dollar property and you end up paying 10% more than you should that sixty thousand dollars. I don't know. Maybe you don't need sixty thousand dollars. Most of the people I talk to, they need sixty thousand dollars. If you could Venmo them sixty thousand dollars, they would be really, really happy. They need the money. That tends to be people that I work with. So you don't want to overpay by 10%. Just because it's 10% cheaper, a 10% cheaper, doesn't make it a good deal if it's a significantly impacted property.
That's ultimately the message that I want to get here. Now, a lot of impacts are not 20 percenters. But some of them are. Sometimes it could be more but most of the time around 20%, you know, is where you start finding buyers for those items. But I will tell you, you need to be aware that if you buy a severely impacted property, there's some markets where I'm not going to recommend that you sell it. I’m going to see if you can hold on (wait for a better market). It's been a long time since there's been a bad market, but you know when the markets bad, these properties, you have to really fire sale them in order to get out from under them. That's not a situation that you want to do. You do need to know that if it's a serious impact, that you're taking on some level of not being able to sell property, whenever you want.
If you buy a house with great lot inside of a neighborhood, I don't care how bad the market is, you’ll always be able to sell that house. Can you get what you want for it? No. (Not in a bad market), but you’re going to be able to sell it - that’s the beauty of the “safer” properties.
A Lot of times, you can split it. You don’t need a property that is 100% safe. It can be a slight impact, you can still be able to sell property. You'll still be able to get a really good return. So, I know, one of the things people worry about, “if I buy a house next to power lines, I'll never get my money back”. Yes, you will! And if you want I'll show it to you. I'll show you when the person bought the property, and then we'll look it will be ten years later, and they make just as much money as everyone else - as long as, they paid the right price at time of purchase!
Okay, so the key here is not to necessarily try to find the perfect property or avoid properties with impacts. A lot of times, they can be beneficial to you. Because, you know, if you, if you're doing this right, you don't care about the specific impact because some people are like, “ I don't care about a backyard, I don’t want to mow it,”. Great. Let's go find that property. You're going to be able to get more house that you want, at a lower price. That’s a win! And then you don’t have to mow the lawn! Not everybody needs to spend all day Saturday mowing the lawn, some people just don’t want to do it.
Buy a house where you don’t need to do it. And then you win, win.
This can be a good strategy. Should you buy a house that’s next to powerlines? I'm going to sum up here, I'm going to do it. Should you buy a house is next to a railroad? Should you buy houses next to a highway? Yes, if it doesn't bother you and you're getting the discount that you need to get. That is the reason you should do it. You should never do it. If you can't live with the impact. Don’t do it. Go find something else, it’s easy to do, there’s plenty of houses.
And understand that if you can't deal with any impacts, you're going to get less house. That's just how it goes. But there are lots of different ways that you can make this work for you and your budget. You just need to be aware how the system works. So have a good one. I hope this got some answers for you. If you're looking for more detailed answers about a specific property. You guys know where you can find me. Thanks a lot, bye.
An Educated Home Buyer is a Happy Home Owner. Read On!
- What is a pre-foreclosure house and how can I buy one?
- What should the humidity in my home be to prevent mold and mildew and other moisture issues?
- How can I reduce the risk of a failed title V and take care of my septic system?
- Have a home? Quick 10 ways to save money!
- Can I win my bid war by dropping contingencies, and should I do that?
- Prices and assessments are up! Do you need to file an abatement?
- When you sign your offer, you’re promising a lot of things unless you legally exclude them. Don’t get surprised!