It was hard to miss the shocking images showing one of New Zealand’s premier cities, Christchurch, in ruins after an earthquake on September 4. However, it’s the after effects that will continue to send shockwaves through the real estate industry for years to come.
Kennard Real Estate sales manager Colin Lock said the Christchurch office of 28 was dealing with a multitude of problems created by the earthquake, spanning property management, sales, insurance, communications and human resources.
Eight property managers service 850 properties - one of the biggest rent rolls in Christchurch. The earthquake affected the business by damaging around 250 rental properties, with 10 rendered completely uninhabitable, Mr Lock explained.
“It’s not total destruction, but we have a number that are damaged to a significant degree. About 80 per cent of them are suffering some sort of damage in one form or another,” he said.
Of course the 10 severely damaged properties will have to come down, but weeks after the earthquake Kennard staff were still dealing with documenting the damage. The earthquake struck on the Saturday morning and wreaked havoc with the city’s power and telecommunications systems. “We took something in the order of 200 calls from people distressed on the Saturday and close to 100 calls on the Sunday,” Mr Lock said. “As of Sunday night we had 68 houses without hot water because the hot water storage systems had burst. We had most of those fixed by Monday.”
Within 48 hours Kennards had a team of five answering calls and had isolated all property managers so they could troubleshoot using the information gleaned from the incoming calls. This continued for two weeks. At the time of the earthquake there were 17 vacant properties, so one of the first jobs was to find out if any of those would provide suitable accommodation for the people who had been displaced.
The initial flurry of activity in the days immediately after the earthquake was nothing compared to the dramas that followed as the full extent of damage was revealed. “We had people who owned rental properties ringing us up and saying we had to get the tenants out because they wanted to move in. They weren’t concerned about the legalities; they just wanted the bed,” Mr Lock said.
“We had a house signed up with tenants for 12 months starting on the 10th and the owner’s house was destroyed so they said the tenants aren’t moving into our property, we are. We’ve also had people who have given notice, but now won’t move because the house they were going to has been destroyed. There’s a whole range of permutations across property management. We’ve had to mediate all those situations,” he said.
On the administration side, the office was only down for a minimal time and back up and running by the day after the earthquake. Then the hard slog began. “We had our first letter out to all our landlords before lunch on Sunday.” Mr Lock said.
This is when the Kennard systems were really tested, as staff started to work their way through a list of 650 landlords. “You find out how clean your data is in these circumstances,” Mr Lock said, adding the office sent out a second communication to all landlords and had contacted every tenant by SMS to ask how everything was by Tuesday.
That week the Kennard team started working with landlords to inspect every property on the books and by the Friday was completing 50-60 property inspections per day. A report was written for each property and photos taken, which meant additional processing of around 400 files every day over about three weeks.
“We’re fortunate in that we took a very conscious decision to have our staff multi-skill. There’s no job in our office only one person can do,” Mr Lock said. This meant Kennard staff could be deployed in the most important role on any given day.
Property settlements posed secondary issues. At the time of the earthquake Kennards had 14 settlements scheduled for the two weeks following the earthquake. Some didn’t go ahead because the owners couldn’t get insurance. “The worst was a chain of 14 properties and number four was destroyed, so all the people above four on the chain couldn’t sell,” Mr Lock said.
Insurance companies have refused to cover properties without duty reports because of the potential damage caused by liquefaction, when tens of thousands of cubic metres of waterlogged sandy silt came out of the ground during the earthquake.
As any agent knows, success in real estate is affected by your attitude, so this is something Kennards has been looking at carefully. “We’re doing everything we can to keep in the right state of mind.
Real estate is very much about how you feel in yourself, “ Mr Lock explained, saying they were making a lot of nonreal estate calls asking clients how they were and if there was anything they could do. “We’re maintaining the relationships we’ve already got.”
It is through this activity Kennards saw the sales contact database was not as strong as it should be, Mr Lock admitted. “We’ve been trying to get across to our guys to get email addresses for everybody and now they can see why we were trying to get that information. We’ve probably only got about 30 per cent of the emails we should have, so one of the lessons out of this whole thing is to have your data up to date and cleaned,” he said.
While the earthquake means it will be several years before business in Christchurch returns to normal, the upside is Kennards could see it had robust systems, but also pinpointed where improvements could be made. The data system is cloud based and hosted in Auckland, with back ups at a second Auckland site and in Australia, so if the server is lost it can be operational again within half an hour. All the staff have PDAs and mobile access.
“What doesn’t kill you makes you stronger, so we will come out of it definitely stronger than we went into it. We will learn a lot about what we do as part of that process,” Mr Lock concluded. There are two sides to every coin, and Kennards intends to find the advantages in this adverse situation.