3 Corsican Grove sold under the hammer for $375,000 after only 10 days on the market.
In browsing The Weekend Press, my eye caught the article by Suzy Garnett and Richard Lang of Duncan Cotterill who made some good points highlighting the pros and cons of pursuing a sale or purchase of such property. While what was stated is in essence the same process with the checks and measures that we recommend, it was good to hear it from a legal point of view, bringing with it recognition from the legal fraternity that there is a way forward for this type of property. Garnett and Lang proceed to go about it in a well informed manner:
There are green-zone homes on the market, where owners have been paid out by their insurers and are selling the property, unrepaired, for close to bare-land value.
Different insurers have different approaches to allowing a house that has been cash settled to be sold unrepaired. Some insurers will not settle a claim on a badly damaged repairable house without a structural engineer’s report showing it can still be lived in and that any recommended repairs have been done. They may also want an engineer’s report when the work is done. Those insurance companies will want an estimate of salvage costs, and will reduce their offer by that amount.
If you’re buying a property which has been cash settled but not repaired, you will need to do a fairly detailed due diligence investigation.
That is why I encourage my vendors of such properties to commission structural engineer’s reports on their properties, so as to aid potential purchasers with their due diligence.
Most cash-settled property sales we have seen have been done privately, because some real estate agents have special requirements before they will list such a property.
I am aware that a number of these properties are being sold privately. However, they are becoming increasingly common in the wider marketplace. It is interesting to see the different ways in which these properties are marketed – some have been advertised as bare land with a “free” house, with others mentioning the “as is, where is” basis as a mere side note.
Any seller marketing their property themselves needs to take care not to misrepresent it to prospective buyers.
Full disclosure is always the best policy.
You will need to have the sales agreement drawn up by your lawyers, with special clauses about the damaged building – in particular, clauses recording the state of the property, clarifying responsibility for demolition, and dealing with liability for unsafe or unsanitary buildings.
You can still buy the worst property on the best street, but get tailored advice and think through the issues before you commit to sell or buy.
Having personally sold 15 of these properties with two currently coming up for auction next week we have good experience with these type of sales. My clients benefit from all our previous sales with the contracts having been ‘solicitor approved’ 15 times now, not to mention our 150+ strong e-database of purchasers actively seeking this type of property!
The bottom line is that we have a proven sales template that produces excellent results for these properties!
I trust your week is going well – for me a busy one, from visiting my mother in Cambridge (where I am currently), to a relative’s wedding in central Otago, to three auctions next week. It would be fair to say it is reasonably full on.