In recent months, we’ve noticed an increased number of buyers who are looking to purchase damaged ‘as is’ properties to repair, renovate and on-sell. While it’s encouraging to know that these properties aren’t just going to be patched up and rented out, it’s important to know the essential steps in going about it. Continue reading
The Christchurch market has seen a proliferation of ‘as is, where is’ properties since mid-2012. Now with insurance companies increasingly inclined to cash settle over-cap claims, we’re now seeing more on the market than ever before. Here we look at how this niche in the Christchurch property market has evolved over the past few years…
If you thought you had been seeing an increased number of ‘as is, where is’ properties on the market, you’d be correct. A search of Christchurch listings on Realestate.co.nz with the key words ‘as is where is’ pulls up over 230 listings.
Undoubtedly this stems from the mainline insurers’ shift towards cash-settling earthquake claims as they struggle to meet deadlines.
As at January 31, IAG (excluding its newly acquired Lumley brand) had only completed repair of 258 of the 3952 property repair claims it had received. It had cash settled 1099 claims.
It had completed the rebuild of 435 of the 4299 rebuild claims it had received. It had cash settled 2085 of these.
IAG’s executive general manager of Canterbury Recovery, Dean MacGregor, says, “We simply can’t ask our customers who have not yet signed a contract to join a construction queue, if we can’t guarantee that we can reinstate their property within a reasonable timeframe.”
It also says it has received overwhelming feedback from its customers that cash settlement has put the power back in their hands and given them freedom to make choices that work best for their particular circumstances.
From the perspective of a person who sells a considerable number of ‘as is’ properties (we’ve just chalked up our 111th ‘as is’ sale since 2012), it’s apparent that buyers are currently are enjoying a greater deal of choice than they did 18 months ago.
The ‘invisible hand’ referred to by Scottish Economist Adam Smith prevails in such circumstances. Increased supply means diluted demand, and therefore less heated competition.
More than ever before, the skills of a proven real estate professional are imperative in achieving the best possible result. With so many ‘as is’ properties on the market, it’s no longer sufficient to plaster ‘AS IS, WHERE IS’ on your marketing materials and expect the punters to show up. With refined contact systems in place, and an ever-growing e-database of over 650 buyers, you can be assured that Team Griff can give you the best chance of extracting the very best from the market. We know this market like the back of our hand.
If you’re one of the 1,000 or so policy holders now embarking on the course of a cash-settlement, we invite you to make contact for a discussion about your options and the necessary precautions. Besides, we are known for achieving great results!
Team Griff has chalked up 110 ‘as is, where is’ sales to date and actively marketing fresh stock. We understand the needs of both seller and purchaser and successfully bring the two together to create that win/win outcome. The results speak for themselves!
Team Griff has a growing client base of more than 700 ‘as is, where is’ buyers. Often we already have a buyer in hand likely to purchase your property. Many properties are sold without a marketing campaign because we have a buyer on the spot.
Team Griff, Immediately upon commencing the marketing of an as is property, targets its e-data base via a professionally designed email marketing platform. Click here to sign up.
We lead the industry with relevant online information and property specific reports. From our first point of marketing this info is readily available at a mere click of a button. We pride ourselves on insisting on and providing comprehensive and relevant structural information. Whether online or in hard copy we have it right on hand – no waiting on massive email files that never arrive.
Team Griff is well versed in the required contractual terms, and even wrote most of the original terms of sale for ‘as is’ sales. It is important that a vendor is indemnified from liability and a purchaser clear on what they are purchasing.
With a 97% strike rate under the hammer, unquestionably auction gets the job done and a sold sticker up fast (no lingering conditional periods) our buyers are decisive and take action on the spot! Our team is known for active buyer participation on the day of auction. While we sell many properties without any marketing, consistently auction achieves better results with this type of property.
Team Griff have a hands-on, can-do approach – we get in and simply get the job done for you. Our extensive experience means that we actually understand the damage of the home, can interpret reports and represent all parties knowledgeably and with confidence. As experts in this field, you can rest assured that you are in good hands and that we can get the job done. Call us today to experience the ‘Team Griff Difference’.
It would be fair to say that the “as is where is” market is continuing to build momentum as the practice has simply become an accepted option when considering which way forward with a quake damaged property. Since late last year we have noted that competition for these perceived bargain properties has moved up a level.
Broader cross section of buyers
No longer is it only investors that are seizing these “opportunities” as high yielding rentals; we are now seeing a much broader buyer profile following this niche market. Active participants include builders and those in the construction industry who have the necessary skills and technology to appropriately remediate and return the property back to an insurable level. Also in the mix are parents assisting children into their first home and we now even have a good following for these properties being secured as the family home.
Filling gap of affordable housing
I’ve quoted this before, but in an unusual but positive way the ‘as is, where is’ market is providing a viable solution for affordable housing in Christchurch. Quite frankly I can understand why people say “at this price we can live with a crack in the floor slab or settlement of between 50 – 120mm”. While it is important to make a well-considered decision, take advice and to check over the reports in detail, unquestionably a large percentage of these homes are structurally sound.
My team and I have been have taken a consistent approach to insisting on professional reports and in making those readily available to the prospective purchasers when marketing these properties. This I believe has helped bring transparency and ultimately credibility to this emerging market, housing that we believe in most instances will be around for some time yet.
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I look forward to meeting you on the street in the marketplace and do feel free to make direct contact with one of my team or read more at Griff.net.nz.
Team Griff has chalked up 81 ‘as is, where is’ sales to date.
Team Griff has a growing client base of more than 550 ‘as is, where is’ buyers.
3. Contractual terms
Team Griff is well versed in the required contractual terms, and even wrote most of the original terms of sale for ‘as is’ sales.
Team Griff has a proven template and track record of getting results.
5. Proven record
Team Griff has an impressive auction success rate under the hammer.
6. Team approach
With a can-do hands-on approach we get in and get the job done for you.
7. Online material
We lead the industry with relevant online information and property specific reports
8. Our clients do the talking
Team Griff’s satisfied clients say it all – check out their comments below.
“Griff is absolutely in tune with buyers and sellers alike. He has a wonderful manner which appeals to young and old. He is very aware of the trials and tribulations experienced in the east of Christchurch and can empathise with his clients. He made it all so easy.”
– Barry & Alison Balsom, 71 Lamorna Road
“Griff’s work has helped us to get on with our lives after the disruption of the earthquakes in Christchurch. We can’t recommend him highly enough. Thank you Griff!”
– Chris & Fiona Innes, 11 Foresters Crescent
Caution expressed: You may have come across the article in The Weekend Press entitled ‘Shoddy repairs but big mark-ups’, focusing on former ‘as is, where is’ properties returning to the market following remediation and now fully insured, some excerpts as follows:
Damaged Christchurch homes are being resold with big price mark-ups, in some cases by speculators who have papered over the cracks.
Valuer Bevan Fleming has seen other inadequately repaired homes, and warned they would cause long-term problems, even to later buyers “years and years down the track”.
Others do it right: While I don’t doubt that some repairs are inadequate, equally there are those that are doing it by the book. The astute are securing these ‘as is’ properties at affordable values due to many home owners being prepared to sell them at attractive levels. Owners in many instances have received handsome cash settlements from their insurers, hence are more inclined to pass some of this benefit onto a purchaser. Besides, an uninsured property is understandably going to have a lesser value than its insured counterparts. Such affordable purchases make it viable for the remediation work to be carried out appropriately and in accordance with local authority requirements. Often due to technology and industry innovation, works can be completed quite affordably and with greater efficiency than an insurer.
Have the documentation: Being a stickler for having and providing professional reports when selling any ‘as is’ property for clients, it is now commonplace for building inspection reports and documentation to be provided for fully insured properties. I’m a strong believer in equipping buyers with all the information they require with regard to reports, scopes and repair documentation. I believe the key to providing a clear path forward for remediated properties is to firstly obtain a credible repair strategy for the property by an engineer or suitably qualified professional. Secondly, have the works completed by those with the appropriate skills and qualifications. Professionals across the board will require subsequent documentation, whether it be a mainstream insurer, a lending institute and certainly a solicitor is going to want to check the paper trail to ensure all the tees are crossed.
The bottom line is get the right advice and obtain the appropriate documentation.
Happy investing and opportunity seeking!
In a first for my 25-year real estate career, I’ve listed a property with a declared reserve – below its rating land value of $75,000. Now I know what you might be thinking. Why on earth would you do that? Doesn’t that remove the vendor’s ability to negotiate? Is the property that bad?
Let’s add a bit of context to the situation. The property in question is 1/14A Branksome Place, Parklands – an earthquake damaged three-bedroom semi-detached unit to be sold without insurance. Your classic ‘as is, where is’ situation. The fact that it’s on a cross-lease title also gives rise to some issues, namely that it is in breach of the provisions in the Memorandum of Lease. The right of way is unsealed and in need of repair. Nevertheless, the property itself is still pretty tidy and easily rentable.
At the moment, there’s still a considerable number of uninsured ‘as is’ properties on the market. As the person who’s often selling them, I’m finding that more needs to be done to make sure that the subject stands out from the rest. It’s no longer sufficient to yell out ‘it’s ‘as is’ and it’s going to be cheap!’ Buyers familiar with the market now know that they won’t necessarily sell for bargain basement prices.
So when it came to listing Branksome Place, I discussed with my clients the prospect of marketing the property with a declared reserve. My rationale was that it will help make the property stand out from its competitors. It also tells prospective purchasers that the sellers are serious about selling and there’s no question about their motivation. I’m confident it will stir up some interest and I’m certainly excited to see how the whole campaign pans out.
It’d be great to see you at one of our open homes, 2.00pm every Wednesday, Saturday & Sunday prior to auction. Watch this space…
UPDATE: The property sold under the hammer for $111,000 with competitive bidding from the floor.
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.
Last week saw the front page of Wednesday’s paper highlight the concerns raised by the local authorities with regard to “as is” properties flying under the radar. Liz McDonald at The Press reports:
New rules could force owners to reveal details about damage to homes for sale or rent, as concern grows about unrepaired and uninsurable houses.
The Government has confirmed it is looking at ways to address problems emerging with the as-is-where-is housing market in Christchurch.
Earthquake Recovery Minister Gerry Brownlee acknowledged at the forum that as-is sales were “a problem that is certainly emerging, and one we need to put a great deal of thought into and have solutions for”.
Labour earthquake recovery spokeswoman and Port Hills MP Ruth Dyson said the issue was a problem for the whole city, as well as those directly affected.
“There’s a moral argument here. Money is paid out for repairs, it should be used for repairs. Having all these uninsured homes is a societal risk.”
Dyson said central or local government could require details of damage and insurance go on council LIM (land information memorandum) reports until repairs were done, or be listed on sale and purchase agreements.
The bottom line of their concerns is the potential safety risk unsuspecting purchasers and tenants could be exposed to should full disclosure not be made and the appropriate remediation not completed. They are calling for some form of records to be kept and for a Warrant of Fitness system for dwellings to possibly be instigated. While the immediate reaction is for alarm bells to ring, I actually welcome this approach, as this encourages best practice in the industry when dealing with this specialised market.
This also fully endorses my staunch stand with regard to insisting on comprehensive engineer’s reports. Firstly it addresses the question of safety and secondly it forms the absolute baseline of representation with regard to the dwelling’s structural status and integrity. Engineers are the suitably qualified professionals to comment on such matters, not salespeople representing the property on face value.
From experience the buying public welcome transparency and this credible information, indicating that they can make well informed decisions based on good information.
I say bring it on, by raising the bar the “as is” market will only gain more credibility. So get armed with the facts and go forth and buy!