A flood-damaged lifestyle property stripped of everything inside has sold for $620,000 – less than half its rateable value.
The Hawke’s Bay property is one of the first houses, affected by Cyclone Gabrielle, that has been sold on the open market in an "as is, where is" condition.
Agents told OneRoof last month that "as is, where is" properties were expected to sell for around land value only due to the level of work required to bring them up to a liveable standard.
The four-bedroom, two-bedroom property on Swamp Road, in Fernhill, was damaged when Cyclone Gabriele caused havoc on the region a year ago.
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The owners, shaken by the traumatic event, purchased another home in the city last year and decided against fixing the four-bedroom, two-bathroom home.
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They instead put it on the market in an ‘as is, where is’ condition and it attracted multiple offers.
The new buyer, who paid $120,000 below its land value of $740,000 and less than half the $1.388 million RV, is now tasked with reflooring, relining and refurbishing the home built by Platinum Homes in 2017.
Bayleys listing agent Kris August said there was a huge amount of interest in the 6379sqm lifestyle property including from bargain hunters and first-home buyers.
“Some people are just looking for a bargain and we don’t know if it’s a bargain or not because there’s some risk involved in purchasing those properties if you have an intention to on-sell it in some point in the foreseeable future.“
The property has been stripped of its walls, kitchen and bathrooms. Photo / Supplied
However, getting financing for this type of property was difficult, August said, and the new owners were cash buyers who had sold their own property three years ago and had been renting locally until the right property came up.
They planned to carry out as much of the renovation themselves and would call on tradespeople where needed.
“They are clever people and they can see there’s an opportunity. They were cash buyers so they didn’t involve finance, which was a stumbling block for others. They could afford to buy it, but they couldn’t afford to do it up because the banks wouldn’t lend them any money.”
August believed the house sitting at a lower price point than the other ‘as is, where is’ homes on the market, which had RVs of $2m-plus, was also attractive to buyers.
“A lot of people said ‘if you ever get something similar Kris let us know’, but I can’t find anyone who wants to sell currently.
“I need a whole lot more.”
A large five-bedroom, three-bathroom home at 1153 Links Road, in Waiohiki, is being sold in an 'as is, where is' condition. Photo / Supplied
An expansive five-bedroom, three-bathroom home at 1153 Links Road, in Waiohiki, is also being sold as an empty shell. Last month the property, which has a land value of $1.42m and an RV of $2.36m, was inviting interest upwards of $1.2m. It is now priced by negotiation.
While a four-bedroom, three-bathroom home at which was designed by award-winning architect Simon Clarkson and built by builder Robert Lang, is also being sold in an ‘as is, where is’ condition. It has an RV of $2.42m, which includes a land value of $790,000, and is priced by negotiation.
The areas where the Swamp Road and Links Road properties are in have been zoned category one which, according to the Hastings District Council website, is low risk of flooding and only required repairs to its previous state to manage future severe weather risk events.
August said the price needed to make sense to buyers who were buying these large unfinished projects.
“For someone to take on those more expensive ones, there’s a lot of work and a lot of expenditure. If you don’t get it for the right money, you might as well almost start again rather than pick out a building they need to refurbish.”
More uncompleted properties could hit the market in time once owners decided the cost of rebuilding or refurbishing them would be too much, he said.
“A lot of people are playing the wait-and-see game before deciding if they want to do up their own homes or not or waiting to see if they get a category change perhaps.”
A lifestyle property for sale at 664A Swamp Road, in Puketapu, has also had its flooring and walls removed. Photo / Supplied
AUT professor in the School of Future Environments John Tookey said buyers needed to go in with their eyes wide open as the costs involved in reinstating the house could be monstrous.
“Long story short it’s a lot more complicated than you might think just from looking at it.”
The costs could include clearing the site, rewiring and rebuilding it, which were all made harder by actually having the exterior of the house already there, he said.
“It’s not just like threading a needle on a sewing machine or something like that – it’s actually a very convoluted job because the wiring alone in a house is a convoluted effort and actually having the house built around it already just makes it harder.”
He said in some cases it was actually cheaper to rebuild than reinstate a damaged house.
“For Joe Public to take over a flood damaged house in that way and expect to be able to turn it around into some sort of high-end palace at the top of a hat – it’s not a five-minute undertaking and it’s a massively expensive undertaking.”
On top of that there was also a risk of the property being flooded again because “ultimately if it’s happened before it can happen again”. It could also make getting insurance more difficult as it would be perceived as a potential risk item in the insurer’s portfolio, he added.
“Insurers they will be looking very carefully at a property with a notional value potentially when it’s been fully reinstated with nice gardens – it could be $3m. That’s a major expenditure if it has to be rebuilt and there will be a historic claim made by the previous owner on that site for the costs of the house and all the rest of it.”
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