Flood-Damaged Homes: Owners Opting for ‘As Is Where Is’ Selling Approach

Some flood-damaged properties, labeled as “as is where is,” are now hitting the real estate market in their current condition, leaving potential buyers and renters with critical decisions to make.

In the wake of the Auckland anniversary floods, which left significant damage to the Cotesmore Way complex of leasehold townhouses in Parnell, some property owners are grappling with prolonged repair timelines and ongoing costs.

The complex, consisting of 41 homes, remains out of action seven months after the floods, and repairs are still incomplete. This has forced owners to continue paying body corporate fees and ground rent despite being unable to inhabit their homes.

Consequently, some owners have decided to sell their properties “as is where is” before repairs are finalized.

Real estate experts caution prospective buyers and renters to exercise caution in such cases.

City Sales Real Estate sales manager Scott Dunn has taken on the task of selling one of the affected townhouses, explaining that the owner reached a breaking point and opted to sell before repairs are completed.

The ground floors of these properties required extensive renovation after the floods, and while the hope was to have the entire complex fixed by September, the timeline has been protracted.

Dunn noted that the owner received only seven days’ notice to vacate the property and had been placed in temporary accommodation, which was described as substandard. The financial pressure became too much, prompting the decision to sell the property “as is where is” at auction.

However, it’s important to note that these properties may be sold without a code of compliance certificate, posing potential challenges for insurers and buyers alike.

Insurance Council chief executive Tim Grafton emphasized that insuring properties labeled as “as is where is” and lacking a code of compliance certificate could be problematic. He stressed the need for caution, describing it as a “buyer beware” situation.

Rental properties in flood-affected areas, like Urlich Drive in West Auckland, are also seeing increased availability. While renters can generally obtain contents insurance if repairs have been completed, properties labeled as “as is where is” and later categorized as higher risk could lead to higher insurance costs.

Renters United president Geordie Rogers advised renters to consider the potential insurance costs when renting in flood-prone areas, acknowledging that in a competitive rental market, some Auckland renters have limited choices.

When buying a house, Grafton advised potential buyers to ensure that any existing claims for flood damage with the insurer are communicated and transferred properly. It’s crucial for buyers to understand that they do not automatically inherit the insurance policy; it requires the insurer’s permission, and not all rights will necessarily transfer.

Nadine Thomas, head of education at the Real Estate Authority, underscored the importance of property inspection reports and full disclosure of any physical damage by owners and real estate agents when selling properties labeled as “as is where is” and affected by flooding. Buyers and renters should exercise diligence and request access to all relevant paperwork to make informed decisions.