Do power lines, train tracks or cell towers hurt California home values?

You can remodel a kitchen. You cannot remodel the neighbors.

Appraisers call these external factors. They are things off your lot that you can't fix, paint or move. A steel tower behind the back fence. A freight line two houses down. A gas station on the corner with lights that never sleep.

Fannie Mae's appraisal rules say the appraiser must comment if a site has adverse conditions or if there is market resistance to it. The appraiser also has to consider the present or anticipated use of any adjoining property that may affect it. So nobody gets to pretend the tower is not there.

The standard lender data rules even give these things names. On the long-running location field, an appraiser rates a sale as neutral, beneficial or adverse, and picks factors such as Industrial, Commercial, Busy Road, Public Transportation and Adjacent to Power Lines. Yes, power lines made the official list. That tells you how often this comes up.

What the list does not do is set a price. A label says what is next door. The sales say what it costs.

Not every neighbor is the same kind of problem

People lump all of these together. Buyers don't. Each one bothers a different sense, and some of them help.

Some towers are dressed up as pine trees. I respect the effort. Nobody has ever been fooled by a 70-foot pine with no pinecones and a ladder.

I get asked about health concerns, too. I am an appraiser, not a scientist. My job is to measure how buyers actually reacted in the price, whatever their reasons.

How I measure it instead of guessing

The tool is paired sales: two similar homes that sold around the same time, where the main difference is the thing you are testing. One backs to the tracks. One sits three streets away. After adjusting for size, condition and anything else that differs, the gap left over is what buyers paid for the tracks.

Here is a hypothetical. These numbers are made up to show the method. Your street's number could be zero.

Three pairs that agree are a start, not the finish. Next I check the wider market: every sale that backs to that same line across the area, compared with similar homes away from it. If the side by side pairs and the wider set disagree, the one built on more sales wins.

A few rules keep this honest:

• Same street, no location adjustment. A comp that backs to the same line as your house shares your location. More on that in why the house next door never takes a location adjustment.
• Bracket it. I look for sales next to the line and sales away from it, so the adjustments don't all point one way.
• Zero has to be earned. If the sales show no difference, the adjustment is zero, and I show the test that proves it.
• Too small to measure means no adjustment. If the gap is smaller than what the sales can reliably detect, it doesn't go on the grid.

The same approach works for traffic. I wrote about that in the busy street post.

What California sellers have to disclose

California's Real Estate Transfer Disclosure Statement, set out in Civil Code section 1102.6, asks the seller about things like easements, environmental hazards such as fuel or chemical storage tanks, and "neighborhood noise problems or other nuisances." A train that shakes the dishes at 2 a.m. is the kind of thing a buyer would hope to read about there.

Civil Code section 1102.17 adds a written notice when the seller knows the home is next to, or zoned to allow, certain industrial uses, or is affected by a nuisance from one.

Agents have a duty here too. Under Civil Code section 2079.16, a seller's agent must disclose facts they know that materially affect the value or desirability of the property, when the parties don't already know them or can't easily see them.

If you are using an FHA loan, HUD's appraisal handbook has its own section on environmental and safety hazards, so ask your loan officer early if there is a tower or tank nearby.

Disclosure law has details that matter. If you are unsure what to disclose, ask a real estate attorney.

What I see in the field

The biggest mistake I see is the borrowed discount. Someone read that power lines cost 10% somewhere, and now every house within a mile gets 10% knocked off. That is not an appraisal. That is a rumor with a calculator.

The second mistake is the opposite: a comp across town on a quiet loop, no location adjustment at all, and a subject that backs to the rail yard. When the location line is blank and the locations clearly differ, the report should explain why.

Where I do find an effect, I look in two places. The price, of course. And the time it took to sell, because a smaller group of willing buyers can stretch days on market even when the final price holds up. Both are evidence. Both get measured.

And sometimes the answer is nothing. In a tight market with almost no inventory, buyers often shrug at a pole line and write the offer anyway. If the sales say zero, I say zero, and I show why.

What to do before you buy or list

1. Visit at the worst time. Rush hour for the gas station. Evening for the trains. A windy day under the lines.
2. Check the disclosures. Read the seller's Transfer Disclosure Statement and the title report for easements.
3. Ask for the right comps. Recent sales on the same line or the same tracks, plus similar homes away from them.
4. Compare days on market for the near homes and the away homes, not only price.
5. Price it in both ways. A discount you get as a buyer is one the next buyer will expect too.
6. Don't borrow a number. A percentage from a study in another state is not your street.
7. Get evidence if it matters. If you are pricing a listing next to a tower, a pre-listing appraisal can measure the effect before buyers argue about it.