Tale of 2 Houses

Side by side they stand on a hypothetical street in Christchurch, let’s call it – Brownlee Street in the suburb on Muntsbury.

Disclaimer – this is a completely fabricated scenario but it serves as a kind of parable – things to be aware of when perusing the Canterbury property market. It is made entirely by the imagination of Ant, based entirely on the real-life experiences of Ant over his past 5 years running Arete.

Let’s set the scene.

Welcome to Brownlee Street, Munstbury. It’s a beautifully sunny, crisp autumnal morning in 2020 and Covid never happened, it was just a bad dream – we can say that because this is fictional. Us Cantabrians know the type of morning; so cold that you need a scarf but so bright and clear you need your sunnies! Two beautiful standalone houses stand side by side, sharing a fence-line. The houses look almost identical; white picket fences with manicured lawns and a story behind them. The typically beautiful, if a little cold, 1940’s character weatherboard villas with solid rimu floors and lathe and plaster wall linings are a hallmark of the era and relatively common in the existing Christchurch housing stock. Stunning to look at, ripe for renovation and a favourite of first home buyers and investors alike. A recent market appraisal put both homes at a value of $500,000.

Let’s find out about the owners and their stories.

Dave at No1 and Claire at No2 have owned their homes since well before the earthquakes so they were the original insurance policyholders. They both invite each other over their respective fences for a neighbourly snag on the BBQ. Dave rates his sausage game more than Claire’s but that’s not the story here.

Let’s meet the owners and find out more about an unfortunately all too common story…

No1 Brownlee Street

Owner – Dave – a top bloke, real nice Canterbury guy, Swanndri and everything.

The house needed some love before the quakes to be honest but Dave was a busy hard-working man, still bloody is if you ask him. In early 2012 a retired police officer from Australia showed up with a lanyard, a clipboard and that’s pretty much it. He walked around the house in under an hour, explaining in that cross-ditch twang why there was “bloody stuff all wrong here mate, she’s got bloody good bones this Sheila has” (referring to the house). Dave made him a cuppa and they argued over the upcoming Super Rugby season, politely (as polite as it gets with them Aussies).

A matter of weeks after EQC had visited Dave, they’d shifted him into to temporary accommodation, gave the man a 3 page checklist of the damage they’d fix for him and told him he was the lucky recipient of a $50,000 makeover for his old character home and he wouldn’t recognize it when he returned in a matter of weeks. Some plucky contractor gets the 3 page checklist with EQCs direction and a target budget. “Make it look pretty and get the owner to sign off your works, or else you won’t get paid”. People reading this story may have heard similar yarns…the job may have cost EQC $50k, but it wasn’t a $50k job! Every man and his dog’s dog was starting a painting company post-quake. It was the new gold rush….even builders were becoming painters (which says something about the priorities of EQC). So most of the time, the job was a bit of a shocker.

In the early days EQC – who were grossly understaffed and underprepared for a sizeable series of seismic events – had to improvise. Policemen, hairdressers and teachers were given blank 3 page checklists to ‘repair’ (word used loosely) people’s homes. People were categorised, who would fight and who would accept the quick-fix option. The nice Dave’s of this world were often pigeon-holed into the quick fix category. Tidy the house up a bit and “she’ll be right” kind of service. And people were reasonably receptive to this, after all…a full new paint job on an old house seemed great!!

Here’s the issue. At no point was an engineer engaged and the foundation work was never documented. Dave was happy as a Cooney Cooney in sh*t with his freshly painted house, even if the floors did seem a tad out, EQC just told him it was “historical movement”. Yeah. Right. The fact that there was a ‘historical event’ generally meant foundations took a battering – but, who thought they would need proof of floor levels report for their homes pre-quake? Not many of us. So the old ‘historical movement’ card was a tough one to argue, for both sides! However, let’s get back to the true issue at hand…the lack of an engineers report and a paper trail going through council for the repairs that were carried out. This only becomes a problem if Dave decides he wants to sell.

Well, that time has come.

Dave signs an agency agreement with a local real estate company and they organise for some fancy photography and a listing on trademe with the tag line – ‘Bargain on Brownlee, the street that never lets us down… ‘ and the open home is scheduled for the following weekend.

Prospective buyers are provided with a copy of the EQC scope dated 2012 accompanied by the sign off, by the builder for some crack repair and painting works. Good luck tracking them down, they generally left Canterbury when the work slowed down or the standards needed to go up. The house at this point is still ‘fully insured’ and Dave and his insurer are none the wiser.

The open home is a flurry of activity and the fun game of open home bingo is in full swing;

Old guy with a tape measure ✅
First home buyers scoping each other’s intentions out ✅
Buyers with their builder who really wanted a Sunday off instead of discussing indoor/outdoor flowability ✅
The guy with a ZIP level ✅❔😕

The guy with the ZIP level is about to unearth some deep-set issues. He says the house is out of level. ‘Of course, it’s an old house’ the agent tells Dave.

A good offer comes in the following day. Dave accepts it. The buyer organises a building report and lone behold it fails. Due to un-remediated earthquake damage to the foundation and sub-floor. At this point in 2020 Dave has 2 options;

  1. Speak to GCCR – Greater Christchurch Claims Resolutions – a government body set up to fight EQC, also a government body (go figure).
  2. Or he sells his house massively under market value so someone has enough scope to actually complete the foundation repairs.

He chooses wisely and opts to speak to GCCR before their August 14th 2020 deadline for sorting claims out.

At this point Dave’s life is on hold and he’s extremely annoyed at the treatment he received back in 2012. That Aussie policemen done me a kipper, a bloody underarm bowl if I’ve ever seen one. But Dave is not alone. Many Dave’s have received this same treatment. And there are many more Dave’s out there, unbeknownst Daves! If you’re a Dave reading this, don’t be a Dave! We’ve helped many many Daves be pointed in the correct direction. Reach out Dave, we’ll help you! We can put you onto a reputable earthquake repair specialist who will be able to sort everything from engineering through to exemptions and finishing touches. We’ll tell you the outcome later, after we pop next door to meet Claire who has a very similar looking house with a very different story.

No2 Brownlee Street

Owner – Claire is a busy working mum with kids and a social calendar many teens would struggle to keep up with hence her chaotic house is a mad-house and in pretty much the same state as Dave’s was, pre-EQC ‘repair’.

Claire is a smart cookie. Mum of 3 and uber aware of her rights as an insurance policy owner due to her career as a hotshot lawyer. It’s 2012 and the retired police officer who did Dave’s EQC scope an hour ago has just offered to scope Claire’s home. The conversation went a little something like this…”Hi there, I’m from EQC. I’m here to scope your earthquake damage, mind if we come in and take a look” – Bob – the retired policeman from Australia “If you can show me your LBP number and or structural engineering qualification then of course” – Claire – savvy lawyer with 3 crazy kids in the house and no time for this bull sh*t “I’m actually a retired police officer from across the ditch. Are you sure I can’t help, your neighbour looks like he is going to get a full house repaint out of this” says kind but unqualified Bobby “Enjoy your working holiday officer. I’ll wait until the engineers appear and I’ll do it the proper way”.

Sharp, very sharp Claire. But what ensued was tumultuous compared to Dave’s experience. 9 years of living in a broken house. Cracks in the lathe and plaster which spit out dust in every aftershock. Doors closing on themselves and feelings of seasickness when vacuuming because the floors were that out of level. But Claire got what she rightfully deserved. EQC paid out to the cap $100k plus GST and the insurance company paid her out for a full foundation repair as well as consequential damage and everything ‘as new’ which is great when the rimu floors all get added up! She totalled up around a $400,000 payout and the house was hers to either repair or sell As Is Where Is (and she keeps the insurance proceeds).

Claire decides she has had enough and is too busy to repair, so she decides to sell ‘As Is’ and calls Arete (told you she was smart).

She provides Arete with engineering reports to detail EXACTLY what is structurally wrong with the property. This helps us make an informed decision to price up the repairs swiftly, she gets an offer the very same day and she agrees to the price of $280,000 (land value is $200k and Arete believe there is still good value in the dwelling and the repairs can be done within the correct price range).

Whilst this is very much a fictional story, it is fiction based around fact and around stories we hear on a daily basis.

We see dozens of houses per month. Some who just want to sell insured houses privately who tell us their house is fine and EQC ‘fixed it’, like poor Dave. They’ve been in a state of blissful ignorance for almost a decade under no fault of their own. And more frequently we meet Claire’s, who hand over 9 years worth of engineering docs and tell us how many dozen case officers they went through to get to this point.

The Outcome

Dave hops over to see Claire for a BBQ sausage sandwich, he takes the bread and resists taking his own sausages – his are from Peter Timbs and Claires are from the supermarket. Dave is a sausage snob. The two neighbours finally trade their EQC stories. Both not great stories but both with a similar(ish) outcome:

Dave spoke to GCCR and got paid out an extra $90,000 for his foundation work and resulting damage after he engaged Monarch Construction to quote the job. He then got them to do the works. His insurance company were happy to continue cover once Monarch had properly repaired the dwelling (emphasis on properly). The same agent sold the house for $525,000. Dave is pretty happy but he looks back with hindsight at Claire’s experience which was tougher but panned out pretty well.

Claire got paid out $400,000 made up from $100k plus Gst from EQC, the rest from her insurer. She decided to keep those funds and couple it with the offer from Arete which was $280,000. Claire had a combined total of $680,000. A way better result than Dave.

Arete then went ahead with the repairs on Claire’s (sweet rhyme bro) and the property then sells as a fully remediated, renovated villa to a first home buyer for $525,000 – the same as Dave’s. Both houses had a paper trail of the repairs and structural engineers sign-offs…eventually.

The two houses and owners had to take a very different route to their final destination but, happily ever after, the right outcome was achieved for the next purchasers! So go forth house hunting but remember this parable told by an old old wise man…and heed the term ‘Caveat emptor’ (buyer beware). Behind every house in Christchurch is a story. Just make sure you’re reading a good one.