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The Draw of the Flaw
Railroad Tracks, Power Lines, Even Septic Tanks Can Be the Beginning of a Bargain

By Dan Rafter
Special to The Washington Post
Saturday, January 27, 2007

When Steve Isenberg moved to Rockville last year, he gladly bought a condominium directly across from the Metro tracks.

For some, the noise from the commuter trains zipping in and out of the nearby Rockville station would prove too much to bear. But for Isenberg, being that close to the rails was a major selling point -- just one example of how some home buyers find the bright side of what others would consider huge negatives.

"Traffic here is pretty horrendous," said Isenberg, who works in downtown Washington as a financial systems specialist with the U.S. Postal Service. "I absolutely did not want to drive into Washington, D.C., every day. I didn't want to have to deal with the traffic. That was my motivation for living near public transportation."

People in the District and its suburbs purchase houses that sit alongside busy roads or directly under power lines. They buy residences that have no yards, or those within spitting distance of factories and busy nightclubs. These are things that can't be fixed with a coat of paint -- what's called in the real estate business an incurable defect.

The question others ask is an obvious one: Why?

What would bring someone to purchase a home with such an obvious problem?

"Beauty really is in the eye of the beholder," said Henry Burrell, an agent with the Bethesda office of Long & Foster Real Estate. "When looking for a home, different variables come into play. Some of those things are priorities. Some aren't, even things that others would consider serious problems."

Here, then, is a look at some of the reasons buyers purchase that home located just a few sniffs from the town dump.

Putting a Price on Imperfection

Often the big reason for buying a house with an obvious defect is to get a lot of home for a lot less money.

Frank Dodd, associate broker and branch owner with the Clinton office of Real Estate Professionals 100, helped a client purchase a home in Brandywine last year for about $20,000 less than the listed price.

The secret? The house sat about 200 feet from railroad tracks. This didn't bother the buyers -- the house has thick bushes to buffer it from the tracks, and the trains coming through the residential area move more slowly than normal.

But the buyer didn't let the seller know this. Instead, Dodd and his client negotiated as if the proximity to the tracks represented a major problem.

"You have more to negotiate with when you purchase one of these properties that have obvious issues. . . . In this case, we negotiated as if no one else would want to buy this property," Dodd said.

It was made easier because the seller was motivated to sell and was concerned that the trains would derail any chance of a quick deal.

Arlene Koby, an agent with the Bethesda office of Weichert Realtors, said that a seller trying to move a house with negative characteristics generally has to offer it at a lower price.

The question, then, is a simple one: What trade-offs will a buyer make?

"When I talk with buyers, I ask if they are willing to live on a main road and then explain to them that they would get more house for the money, usually," Koby said.

The Only Affordable Way

Purchasing a home with a defect may move buyers into a neighborhood that they otherwise couldn't afford.

Robyn Porter, an agent with the Bethesda office of Long & Foster Real Estate, sees an example of this every day.

She lives near a group of houses that sit directly under power transmission lines in Potomac. Some people have health concerns about such lines; others just consider them an eyesore. But buyers often are willing to live with that to get their children into the local schools, widely thought of as among the best in the region. Perhaps these people couldn't afford the neighborhood otherwise, Porter said.

"Undesired location is a term that everyone is familiar with. But the undesirable portion is in the eyes of the beholder," Porter said. "There are so many different reasons why people buy homes. Some of it is just to get in the market, and they may have to make some sacrifices to do this."

Problems may come, though, when these buyers decide to sell. Porter believes there is a buyer for every property. But it may take longer to find that person if the house is under a power line. And buyers-turned-sellers need to remember that they purchased their location-challenged home originally for a lower price. They need to price the home lower again when it's their turn to sell.

Porter said that there is no guarantee any home will appreciate at the same rate as its neighbors but that houses with incurable defects in general do not necessarily lag the rest of the market.

"Power lines will be a challenge. Railroad tracks will be a challenge. But sellers have to remember why they purchased the house originally," Porter said. "They are not the only people who will have that drive. It just needs to be communicated."

Making Defects Sell

There are times when something that most people consider a defect is perceived as a benefit by others.

Take power lines. Some buyers have no fear of them at all and can't find any scientific evidence that living under them is dangerous. They may also like the wide-open spaces that generally surround homes sitting under such lines.

Valerie Huffman, regional vice president with Weichert Realtors, said that some buyers are happy to pay a little less to purchase a home under power lines. Some are even planning ahead, eagerly awaiting the day when enough evidence exists to prove conclusively that the lines pose no threat. They can then sell their homes for normal prices, content that more buyers than ever will consider power lines to be a nonissue.

"You just need to disclose everything you can when selling these homes," Huffman said. "If a house is by power lines, you should have all the information about the lines and the property that a buyer would want. This helps them make an educated decision."

Some buyers actually prefer homes that sit on busy roads, which could prove a deal-breaker for many others, Huffman said.

Huffman has sold several houses that sit along well-traveled roads. In two of these cases, the buyers purchased the home because they felt it would be safer to live in a busier area, that there would be less crime than in a more secluded neighborhood. Other buyers liked the idea of popping quickly onto the main road, which makes for an easier commute.

Successful sellers focus on the positive aspects of their homes' defects. For instance, Huffman said, a home on the edge of a noisy business district may offer five bedrooms for a price that generally buys only four.

"You have to let people know that with this home you can get so much more than you otherwise could find at the same price," Huffman said. "If you are selling a house in an area with a defect, you have to greatly focus on the other positives."

Not All Problems Persist

There are times when something looks and feels like an obvious defect, but, upon closer examination, isn't really a problem.

There are homes next to busy highways that have enough landscaping and sound barriers to mask the noise of SUVs and trucks whooshing past. Houses under power lines may have their windows arranged so that their owners look out onto a clear field, not at metal towers.

Then there are those homes with serious-seeming defects that can be cured relatively easily.

Take the case of Dmitry Krylov. He loved the Colonial-style house in Rockville as soon as he saw it in 2004. It had two issues, though, that Krylov and his wife considered obvious defects: It had an onsite septic system, something with which Krylov had never dealt. And it had high radon readings.

Neither defect, however, turned out to be a deal-breaker.

Krylov hired a radon remediation company to install an exchange ventilator in the basement. That eliminated the radon problem, at a cost of $800.

And the on-site septic system? The home's seller agreed to set aside funds in escrow that would be used to repair the system if it had any problems. The concern on Krylov's part was justified: The system was about 40 years old.

Fortunately, inspectors found that, despite its age, the system was in good condition. They estimated that it would function well for about 40 more years. The sellers got their escrow money back, Krylov was satisfied and a potential defect turned into a nonissue.

"We were very concerned at first," Krylov said. "We considered these very serious issues, maybe issues that would convince us to look at another house. But they were relatively easy to deal with. Some issues that look extremely negative may not really be all that serious."

That's the same attitude taken by Isenberg, who lives along the Rockville Metro tracks. Even with its location, Isenberg likes his condo and its price.

But he's also a big fan of his morning commute.

"If I'm tired when I get on, I take a nap," he said. "If I want to read, I read. I don't have to put up with traffic at all. I think it's great, actually."

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