01/16/2023
What to Do About Unpermitted Work When Buying or Selling a Home?
Unpermitted work is construction on a home that does not carry the necessary permits to make it legal per local ordinances.
Ultimately a lack of permits does tend to carry a stigma for buyers, which causes many buyers to avoid the property. However, at the same time buyers are often still realistically willing to pay something extra for the addition. This is one reason why some appraisers might give a non-permitted area some value in the report (but the area may be considered as storage instead of living space).
Loan Problems: Some lenders will not loan on non-permitted areas, and they ask appraisers to not include any non-permitted area as square footage. Other lenders will loan when there is a non-permitted addition, but they ask appraisers to consider how a lack of permits impacts value.
When I am Listing a home, I pull tax records - If the records show a 3 bedroom, 1 bath - but the seller states it is a 4 bedroom, 2 bath - my first questions is? Did you have a remodel done and did you have it permitted?
If the answer is yes and no we did not have it permitted- then I will explain how we need to value their home.
Typically if the home is not in a High demand neighborhood- you will comp it as a 3 bedroom , 1 bath home - and in the clients remarks you can advertise it with the remodel and in the agent remarks you state up front the remodel was done without permits and have disclosures that state this as well.
Often, if you price a home correctly - buyers will pay more for the upgrades and remodel.
On my listings, when we receive multiple offers, and the purchase price is greater than the list price, I submit an Addendum stating the buyer agrees to pay the difference from the list price to purchase price.
For more Real Estate questions, please free to reach out to me.
Becky Harrison
530.300.3804
Hilbers Legacy Properties
DRE #01418788
