Observing the activity of the as is market over recent weeks and months it is interesting to note how this niche market is unfolding. Having evolved from “rogue real estate agents sell condemned homes” to “Fendalton home sells ‘as is’ for $1.2m” brings an interesting shift in both the perception and the acceptance of the practise of selling these uninsured properties.
With both the insurance companies keen to get the cheque book out and policy holders equally keen to resolve their 3+ year insurance claims, the only defining difference between a standard home sale and an “as is “ sale now appears to be insurance. While this may appear a little extreme, to bring it into context, owners cashing out and selling uninsured is predominantly based on a financial decision of viability of both insurer and home owner. Hence the actual damage of these homes varies hugely and in a lot of cases is quite minimal.
For an insurer to “make good” like for like in order to honour their policy promises is often massively expensive. On the contrary for someone purchasing the same property and being only concerned with returning/lifting it to a compliant and insurable standard the cost can be significantly less. Not to mention of course those who simply see these properties as an affordable option to secure a cheap home for either themselves, family members or investment and only carry out cosmetic remediation to make the home more comfortable. In a lot of instances purchasers are not even concerned about insuring these properties or are opting for partial insurance (normally accessed offshore).
Following many a robust discussion with solicitors who in the past have perceived/viewed these properties as all but a pile of rubble and who have consequently been quick to shift full liability onto a purchaser just in case the next tremor reduces the property to such a heap on the ground, I think we have all grown to appreciate that these homes are and will be a reasonably permanent fixture within the city landscape for some time yet.
Competition establishes market value. With more choice for purchasers, as is sellers can no longer hold the card and get away with selling an inferior property for an inflated price – purchasers are simply saying they will wait for a better property or move onto the next sale, often just down the road. So who knows just where this market is heading, however I think that with new technology and repair strategies being employed almost weekly, the ability to return these homes to an insurable standard is becoming both more viable and straightforward.
Despite the competition in the as is market here at the Griff team we are not complaining – with one an as is sale under the hammer, one auction brought forward on Monday and another sold prior to the campaign kicking off it is far from bad news and a reasonably productive week.
Somehow I seem to have acquired the label of the “go to” person for as is where sales, however I think it would be far to sale that we have a formula that works and if my maths is correct we are about to launch number 65 to the market this weekend.