A Hamilton property with no code of compliance, making it tricky to insure or get finance, has sold for $711,000 – just over half its RV of $1.3 million.
The four-bedroom home on Millthorpe Crescent, Pukete, was targeted specifically at builders or people in the building industry with the skills to fix it.
The house did not have its code of compliance despite being built in the early 2000s. It was also made from cladding associated with some leaky homes.
Harcourts salesperson Nathan Haman said after discovering more issues around the property when it was first brought to market at the start of the year, the aim had been to price the property at land value.
Start your property search
It was priced at $705,000 after passing in at auction with an advertised reserve of $750,000 last month, and just days later went into a multi-offer situation. All five offers were from people in the building industry.
Haman said $711,000 was not the highest offer but was chosen because it had fewer conditions.
The new owner is a builder and plans to live in it while he remediates it.
Read more:
- Buyer's gamble sees flood-damaged South Auckland home sell for $575,000
- New Zealand’s flood devastation: Homeowners left to fend for themselves
- Auckland flood damage: ‘If they try and hide it, they’re asking for trouble later on’
Interested parties were also given a 100-page report outlining what could be done to the property to bring it up to code.
“What made this one more difficult was just around the type of cladding that it had, that sort of I guess is what made people wary and it’s just a harder product to get lending from the banks. If it was a brick home, it wouldn’t have been as hard to find the right buyers for it.”
The asking price was calculated based on the worst-case scenario such as the house having to be reclad, he added.
Haman, who has become an expert in selling troubled properties that might be missing their code of compliance or are leaky, said it’s not unusual for these types of properties to sell for land value only.
“If it’s a tear-down or something that needs a lot of work, land value is usually sort of the goal so when you get more than land value you are generally pretty happy.”
A builder has bought the large four-bedroom home to live in while he fixes it. Photo / Supplied
A waterfront home on SH2 in Pukehina, which had no code of compliance or resource consent, sold for $2.1m last week. Photo / Supplied
Haman said they were completely upfront with buyers about the challenges with the house and the fact that getting both insurance and finance could be difficult without a code of compliance and because of the cladding it was made from.
It also meant buyers and vendors didn’t waste their time only to have the deal fall over on them further down the track, he said.
“Our marketing was very clear that there were no representations made on the property at all from the owner or from us and they had to do their own due diligence and we were seeking people in the building trade.” This meant they could also get builders insurance, he said.
Last month, a Pukehina lifestyle property on SH2, marketed by EVES, that had no resource consent or code of compliance sold for $2.1m in an auction ordered by the court. There were 12 registered buyers and more than 20 bids placed on the waterfront property, which sold for just above its land value of $2.04m.
Experts told OneRoof earlier this week that getting a Code of Acceptance in retrospect can also be challenging.
Bill Cartwright, a licensed building practitioner and consultant for Guardian Housing Services Limited, said not having a consent can sometimes chop hundreds of thousands of dollars off the asking price and narrow down the number of buyers who can purchase the property so there are only cashed-up buyers left.
- Click here to find more properties for sale in Hamilton
