Real estate repair companies benefit from earthquake-damaged Christchurch homes, booming market

Property repair companies targeting earthquake-affected homes are benefiting in Christchurch as the city’s housing market continues to thrive.

A decade after the earthquakes, homeowners, disillusioned with protracted negotiations with EQC and insurance companies, are beginning to sell their properties on an “as is, where is” basis.

The recent sale of Fendalton’s property at auction for $2.4 million – more than $600,000 above its relative value – illustrates the niche market in a burgeoning industry.

A bid was opened by six potential buyers at $1.8 million. The previous owners bought the 2,100 square meter property in 1994 for $542,000 to build a contemporary architectural home.

Steve Ellis, owner of Bayleys Fendalton, said the four-bedroom property in Clyde Road was sold to a buyer who specializes in property repairs “as is.”

“There are a lot of people who haven’t settled (with the EQC/insurance companies) but there are also a lot of people who have had repairs of some sort but no major damage has been picked up — and that’s one of the biggest drivers (for sale),” Ellis said.

“This particular one… they did all the repairs, they took the cash settlement and they did major cosmetic repairs but the levels of the house were never taken, which is absolutely amazing.

“The levels were (later) taken by the building inspector and out a mile. They had to go back and reopen the claim and renegotiate.

“A lot of people have finished the process. The math often says that you will get the same amount of money or sometimes more by taking the cash settlement and selling on an ‘as is and where is’ basis,” Ellis said.

It still happens in large numbers. There are still 10 months on sale easily, priced between $500,000 and $3 million.

“There are a lot of people with a lot of experience who have done a lot of repairs, a lot of builders and developers who look at those properties and see an upside for them to buy ‘as is’.”

Ellis cited the example of a “flowing” property on Waiwetu St, Fendalton, which recently sold for $2.8 million.

“They were going to clear the house and build a new one. It will be a six or seven million dollar home by the time they are finished.

Other buyers sell, or keep the property as an investment.

Simon Hunter, of the aptly named asiswhereis.co.nz, estimates that the company has completed 100 transactions over the past five years.

“Unfortunately, there are still a lot of people squabbling over their payments with insurance companies.

“You get some people at the end of their rope. For some people, it really affected their lives, which is really sad.”

Hunter said the company did not bid at auctions, and instead relied on referrals for new business before handling each property on a case-by-case basis.

“I just started my first new development. We have always been a firm believer that if we can salvage the house, we will. We own a lot of our stuff and turn it into affordable rentals.”

Elliott Street of Iron Bridge Property Group said there has always been strong interest in earthquake-damaged properties when they hit the market.

“Since the earthquakes, the magnitude of suitable properties has slowed down. There has been increasing interest in the properties of areas with high density” as is the case, he said.

“This creates an opportunity after the earthquake for real estate that didn’t have much value before.”

Street was not surprised by the sale of earthquake-damaged real estate still prevalent a decade after the natural disaster.

“I think it’s a unique environment where Christchurch is in post earthquake. There have been a lot of unknowns from zoning, insurance issues… some people are determined to get that done with insurance, so keep going. It’s a tough environment for me. For many people, those properties were, before the earthquake, their private homes.

“Overall, it’s clear that many people just want to go ahead especially when there are buyers. Some are more difficult to sell than others, depending on their issues, but the change in the county’s scheme around zoning has helped many,” Street said.

The chief executive of the New Zealand Real Estate Institute, Jane Baird, was relieved that repair companies were participating in the market.

“On the surface, this sounds positive, because it gives homeowners who are unable or unwilling to make their homes up to standard, a chance to sell and find something they can get insurance for and hopefully feel more secure,” she said.

“Because there are a number of repair companies doing this and sales are made on the open market, sellers are more likely to receive offers that reflect market value.

“More than 10 years after the Christchurch earthquakes, it is a shame to see so many property owners still struggling to get their properties EQC compliant,” she added.

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