Workers using suction hoses try to clean up an oil spill this week from the Kalamazoo River in Battle Creek, Mich.Bill Pugliano
For a small number of homeowners in western Michigan, where property values have sunk amid the U.S. real estate bust, Pat Daniel has just made an offer they can't refuse.
The CEO of Calgary's Enbridge Inc. said Tuesday the company will buy homes from people who are worried the Kalamazoo River oil spill will reduce their property values.
The offer applies to 200 homes that lie within 60 metres of the river along the 48-kilometre stretch of the spill, or within the local county health department's designated evacuation zone, Mr. Daniel said at a news conference in Marshall, Mich.
Homes that were listed for sale before the spill will receive full list price, while homeowners who would like to move because of the spill will receive the appraised value before the spill, he said.
"We're going to stand by the people of this area with a guaranteed offer to make sure no one comes in to offer them a price for their home at an unfairly low price," Mr. Daniel said. "That isn't right and we won't let it happen."
For people who own homes that would take a long time to sell in an area of double-digit unemployment and depressed real estate prices, that offer could prove to be a godsend.
According to online real estate database zillow.com, home prices in the Battle Creek area have fallen 30 per cent since the spring of 2006. Prices in Marshall, the location of the spill, have fallen about 23 per cent in that time. It used to take about 60 to 90 days to sell a home in the area, but the economy has lengthened the time that homes sit on the market, said Jerry Clifton, a Coldwell Banker agent in Marshall.
The spill will "undoubtedly" affect property values, Mr. Clifton said. As a result, he expects a number of people in the area to take up Enbridge's offer.
"The oil company is making all the right gestures, that they are going to step forward and attempt to pacify the people who feel that they are unable to continue to live in that environment," Mr. Clifton said.
Cat:e528746c-3414-401a-b14b-50247e3bdf01Forum:d0fa4e14-88d2-41f9-8a19-896bdff9544b
House prices in the area can range anywhere from $75,000 to $175,000, he said. Appraisers will likely offer homeowners the prices of three comparable properties sold in the area the past year to determine home values, Mr. Clifton said.
The offer will be on the table for at least one year, but Enbridge doesn't expect many people to take advantage of it, Mr. Daniel said. The company devised the plan after local residents approached Mr. Daniel and other Enbridge staff to say they were concerned the oil spill would diminish property values, he said.
"We don't expect we're going to be taken up a lot on that offer, primarily because we think this will keep speculators out - those who think they can come and buy at a lower value - and that protects the local resident," Mr. Daniel said.
Enbridge is prepared to purchase all the homes if necessary, Mr. Daniel said.
"We would not expect to ultimately lose a penny on that and that is because of my confidence that we will see no diminution of value," he said. "If we buy a home, we expect to see an asset of at least that value, if not more, going forward."