Property Woes

Hi everyone!

I thought I would start our day with a brief update on where we are at.  As you know we began our journey at our city home and have gotten to the point where we are ready to move out to a larger homestead or lifestyle block.  We put an offer in on a residence outside Christchurch, the big city on the south island of New Zealand.   The house is very old (made in the early 1900s) and in poor shape but we thought we might be able to fix it up affordably.  The price seemed right for that, but as we began to do our due diligence on the property (property inspections, engineer’s reports etc.) we discovered many things that we did not expect.  Some of the things we discovered were minor, but then we got a big bombshell dropped on our heads.  The engineer and the building inspector both reported that the house had substantial borer beetle damage in the timber subfloor and the foundations were even worse than we first believed! We took this information to the vendor’s insurance company to see if we could get continued home insurance and of course, there was a resounding NO!  They were completely unaware that the home had not received any maintenance at all over the last 5 1/2 years since the vendors had purchased it.  We think this may well cause other problems for the vendors’ insurability even now, but we won’t go into that.

The home and improvements are worth approximately $150,000NZD on Rateable Value “RV” (New Zealand’s government appraisal for property tax purposes).  The insurer says they will not cover the home unless and until a number of problems they consider critical are remedied to what they (the insurance company) think an acceptable level.  They require any future buyer to

  1. Replace/repair the foundations on the whole property where needed,
  2. Fix the subfloor by removing and replacing any borer damaged timber,
  3. Replace the roof,
  4. Rewire the whole house
  5. Replace all interior gib (plasterboard) as it is scrim and sacking which is a fire hazard.
  6. Replace all the plumbing to current code standard as it is an old type which is significantly prone to leaking.
  7. Replace weatherboard and external cladding.

If you look at this list and add them up in your head you’ll realise as we did that they’re basically asking us to build a brand new house.  The only things that are allowed to remain are any existing timber structure that is not damaged by borer beetle, and surface things such as joinery and cabinetry.  Thus we’ve come into a big problem.  We are willing to purchase the property as land only for a fair price but the vendors believe they will get the full price of RV land plus improvements value prior to our findings and are not willing to accept significantly less. We understand that they’re in a difficult situation – they probably bought the house for much more than it was worth even then and can’t afford to sustain a loss of this magnitude on it. But we can’t afford to get them out of this mess, and none of the banks would be willing to lend to new buyers on a house like that in any case.

So where does this leave the Kiwi Homesteading family? We’ve instructed our lawyer to pull the plug on our offer.  Now, this doesn’t mean we are giving up on finding land, and we aren’t even giving up entirely on this particular section.  All it means is that we’re telling the vendors that their desires for that property are unrealistic and we expect them to either come up with a better price or they can go back on the market again.  We also expect (given the recently added properties of much better quality in the area at similar prices) that they will not find anyone to buy it at their asking price.

~Grace

Advertisements

2 thoughts on “Property Woes

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s