Gas Pipelines a Blight in Real Estate? Explosions and Easements May Cause Resale ConcernsBy Liz Dominguez
Natural gas. In recent years, when hearing this single, seemingly minor detail for a property's utility hook-up, buyers typically conveyed a tone of excitement. Nationally and in recent history, natural gas has been the leading choice for heating fuel in the U.S. residential property space; however, according to the U.S. Energy Information Administration, electric heat may be gaining ground. Is affordability the only stimulus, or are other factors at play? Here's what could be causing a possible disinclination toward natural gas heating.
Fear in Response to Gas Explosions and Health Hazards Although rare on a large scale—there have been 646 incidents related to natural gas distribution since 1998, according to the U.S. DOT Pipeline and Hazardous Materials Safety Administration—gas explosions and other related incidents do occur. Recent events may be causing buyers to hesitate with homes that are hooked into a natural gas pipeline. Just last month, a large area of Merrimack Valley, spanning the towns of Lawrence, Andover and North Andover in Massachusetts, experienced a catastrophic gas line explosion that led to the death of one resident, injuries for around 25 individuals and the damage or destruction of over a dozen homes and businesses. Over 8,600 residents are without gas heat and hot water (at press time), and the restoration may be a months-long process. The culprit? Natural gas pressure that was 12 times above the normal level before the explosion, according to USA Today. Columbia Gas of Massachusetts, which handles the distribution of gas to these neighborhoods, is currently under investigation by the National Transportation Safety Board. The investigation has uncovered that parent company NiSource, which serves about 3.9 million customers across seven states and operates an estimated 60,000 miles of distribution pipelines, is tied to three other gas-related explosions:
What can industry professionals do to assuage these fears? The best course of action is to educate homeowners. They should evacuate the area immediately if they experience:
Opinions are split on whether gas lines near homes, specifically main lines with easements, affect a home's property values. Multiple studies defend either side; however, the majority of studies claiming gas pipeline easements do not negatively affect a home's value are conducted by gas companies themselves, injecting the question: Are the results biased? According to one source, the Forensic Appraisal Group, pipeline easements can reportedly create negative impacts ranging from 50 percent of the easement land value to 30 percent of the entire property value. What can impact a home's valuation? According to the report, there are several stigma factors, such as potential damage to irrigation systems and wells, damage due to crop loss, soil compaction, stray voltage, and more. Properties constructed near one of the larger transmission lines that feeds the gas distribution network may have more trouble selling than homes that are merely hooked up to an extended network of natural gas distribution pipes. Could there be additional causes for concern above those listed by the Forensic Appraisal Group? Gas pipeline easements, depending on local laws, may affect the use of a property; residents may not be able to build permanent structures or plant trees directly over easements. Additionally, if the gas company needs to repair the pipeline, they would most likely have the right to dig up the homeowner's yard. How can consumers stay well-informed during the homebuying process? They may have to do their own due diligence. "If [a gas company] has an easement granting it access to the property to work on a gas line, that usually is noted on the title filed with the house," said Tom Pool, a spokesman with the California Department of Real Estate, in a local news interview for SFGate. "In addition, sellers of homes are required to notify the buyer of all material facts that affect the value of the property, which might include a nearby pipeline." However, Pool said if the seller hasn't been told of the pipeline's existence, they can't be held accountable if they fail to inform the buyer. Agent Strategies for Facing This Market Challenge This is yet another obstacle that agents may face during today's real estate market. A little research and powerful scripts can help turn these concerns into actionable strategies. What can agents do?
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