September 3, 2018
Orion’s brokers, and Orion’s AEs, “have seen it all.” Well, maybe not, as we find solutions every week for our broker’s situations, whether they be in credit, appraisals, or program needs. We are seeing that as first-time home buyers are hungry for a home to buy, they tend to consider some properties that are unusual, whether they have houses already or lots upon which to build. Is all land worth buying?
For example, According to a Wall Street Journal article, a study was done of 5,455 vacant lots sold between 2000 and 2016 in Pickens County, S.C. College of Charleston assistant professors Chris Mothorpe and David Wyman found that vacant lots next to high-voltage transmission towers sold for 45% less than equivalent lots not located near transmission lines. Non-adjacent lots within 1,000 feet of a transmission line sold at a discount of 18%.
There are studies showing that the proximity of power lines to a built home lowers its real-estate value, regardless of where it is in the nation. Mothorpe and Wyman’s focus on vacant land eliminates the influence of a built structure on those values. Assuming land represents 20% of the overall value of a home, the authors estimate that a 45% decrease in land values equates roughly to a 9% drop in total property value. Orion’s brokers have had experience with this type of situation and will often educate their borrowers on it.
Prof. Mothorpe suggested three main factors driving the discount: health concerns associated with proximity to high-voltage lines (though, as the authors note, researchers have not established solid links between proximity to power lines and health issues); the unattractive views; and, for properties very close to the lines, the humming sound they produce.
This is just one example of counseling that our brokers go through with borrowers. Orion, our AEs, and our valued brokers want the borrowers to succeed, be happy with the financing, and be happy with their purchase. And if it means passing on one property and waiting for something better, we understand.