In the past, selling property in ‘as is where is’ condition wasn’t something many New Zealanders were used to, but ever since the Christchurch earthquakes, as-is-where-is property sales have become commonplace, not just in Christchurch but all around New Zealand.
What Exactly Does As Is Where Is Mean In NZ?
As a legal concept, ‘as is where is’ applies to the sale of something presented in its existing condition (whatever that condition may be). For property, this usually means there is likely some significant damage, the property may be uninsurable, there might be potential waterproofing issues, foundation problems or unconsented alterations/repairs. As-is sales can also just apply to properties where the owners prefer a cash settlement or require a quick, hassle-free cash sale.
For the buyer, choosing to proceed with the purchase is seen as an indication of acceptance of the property exactly as it stands, even if there are unforeseen issues that need to be addressed. The as-is-where-is method of sales means the buyer is the one shouldering all the risk, they will also usually have to make a full cash purchase as banks don’t tend to approve mortgages on uninsurable houses.
The rise in as-is-where-is sales came about after the Christchurch earthquakes when there were issues around insurance on damaged properties and the associated mortgage implications, as well as the drawn-out and complicated repair process that many people faced. As many homeowners faced the perils of EQC negotiations, repairs, and dodgy contractors, some chose to avoid the repairs altogether, take a cash settlement and move on or were so deep in the negotiation process that the repairs just never happened.
For quake-effected property sales in Christchurch, the as-is-where-is property norms that emerged were generally centred around when the homeowner had previously accepted a payout from either EQC or their insurance company but then, instead of repairing the home chose to sell the property, keep the payout and move on.
Can You Sell Your House As Is Where Is?
The short answer is – yes! Selling your house in as-is condition is actually a very straightforward process that can be applied to the sale of any property. In fact, some homeowners choose to sell this way even if there is nothing wrong with their property simply because of the hassle-free cash-based sales process.
For some sellers of as-is-where-is properties, having faced an arduous process of uncertainty and disruption to their day-to-day living circumstances after a natural disaster or significant event, the decision to sell their property as is-where is offers much-needed respite with the opportunity to move on and make a fresh start elsewhere. For others, it’s just a means to an end where the house may belong to a deceased family member, is in a derelict state, or there are family circumstances where a quick, easy cash sale is necessary.
Top 8 Benefits Of Selling As Is Where Is
When weighing up the pros and cons of selling as-is-where-is versus repairing damaged homes or the traditional sales process, there are a few benefits that can help you make the right decision—let’s take a look below.
- Reduced Financial Strain. Funding the repair of a damaged home and maintaining your daily living costs can be difficult, especially if you are in the unfortunate situation of having to pay rent and a mortgage at the same time. Selling as-is-where-is can provide greater certainty and less strain on the finances, improving your financial future.
- A Very Quick Sale! One of the most significant benefits of as-is-where-is property sales is that they can be completed in very short timeframes. Once the decision is made, the process can be effectively completed in as little as 24 hours, rapidly freeing up your capital and preventing/eliminating stress.
- No Drawn Out Sales Process. No endless open homes, no cleaning, no random strangers traipsing through your house, no real estate agents – just get an offer, negotiate and make it happen!
- No Picky Buyers. General public offers and interest in earthquake-damaged homes and as is where is home sales are naturally subject to fairly stringent inspections, geo-tech reports and other conditional requirements such as finance. This will mean higher lawyer fees, a longer sales process and sometimes sales that fall through even after all that effort and cost. Plus damaged homes tend to achieve much less desirable sale prices on the traditional real estate market while also spending a more extended period of time on the market.
- No More Uncertainty. Even if your home has been repaired you will always be stuck with a previously damaged house, which even if no one else knows – you do. This can weigh on your mind and reduce once happy memories to less than optimal experiences and uncertainty around the repairs and the possibility of further unseen damage.
- Ditching The Stress. Having to worry about repairing and maintaining a less than optimal property is quite a responsibility, especially with the pressures of today’s busy lives. For some people getting rid of the property is the best thing they ever did – freeing up their time and money for more productive pursuits.
- No Surprises. All good as-is-where-is property sales companies will make the sales process very straightforward. After the initial contact, they will generally ask for any documentation you may have on the nature of the damage to your property, then simply make you an offer. Your offer will be reflective of the potential sale price of the property once repairs are complete, minus the cost of repairs and commission.
- Freedom! Just want to let it all go and move on with your life? As-is-where-is property sales have become standard practice for fast easy cash sales, making for a logical and safe way to let go of the past and move forward in the property market.
Tips For Determining The Market Value Of Your Property
How do you know if your as-is-where-is buyer is offering you a good enough price? As you are effectively skipping putting your house on the market and enjoying all of the time and cost saving benefits that come with that, one of the biggest fears people who are selling as-is have is underselling their property.
Long story short, it can sometimes be quite difficult to find appropriate price comparisons and relevant data on the exact value of your home (especially when dealing with damaged homes). But there are a few things you can do that will help to get some idea of the current market value of your property.
- Calculate The Land Value. An excellent starting point for any property valuation is the value of the land the house is sitting on. The value of the land is the most straightforward figure to determine as it remains relatively unaffected by the overall condition of the property. Land value can be fairly easily estimated based on government rating information and suburban trends.
- Determine The Extent Of Repairs Required. There are different types of repairs or remediation that your property might need which will affect its value in different ways. Things like aesthetic repairs are less of a concern than issues with levelling or foundations, roofing, structural issues, waterproofing, and cladding etc. Another important factor to consider might be if demolition is likely the best course of action.
- Compare Property Prices. Just as any good real estate agent would, it is advisable to do a little bit of research around what other properties in your street or in the general area have sold for recently. If you don’t have time to do this yourself there are a number of handy research tools and apps offered online.
- Get An Expert Opinion. A good one if you would like to have the added security of paperwork to back up your assumptions – getting a professional property valuation from a registered valuer will give you a good idea of how much your property is worth on today’s market in an official capacity.
- Evaluate Market Demand. As we all saw in the aftereffects of the COVID-19 pandemic, market demand is not something that can be overlooked when determining a property’s sale price. The demand for houses in your area may be affected by extenuating circumstances and play an important factor in determining its current market value (CMV).
- Assess Current Economic Factors. Interest rates, employment, inflation and general consumer confidence all play their part in determining the price people are willing to pay when it comes to purchasing a new property. This can mean even though your property was worth more a year ago,that , it is worth something other than that same amount on today’s market when faced with more challenging economic conditions.
Are you thinking about selling your home as-is-where-is or need more advice on the as-is property sales process? Give Kane a call at My New Start, the Christchurch-based specialists in purchasing homes being sold in as-is-where-is condition.