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First of all, an unpermitted finished space cannot be counted as part of the finished square footage, so you should be able to get the property for a lower price. Secondly, when I have encountered this in the past, working for a buyer, we asked the seller to do everything to bring it up to code, then had it re-inspected.
Does one subtract even more than the value of the work since it will need to both be torn up and replaced following a permitting process? What if the owner is a builder/contractor who did his own work?
I'm curious to hear all the opinions, but this is the one part of the post I'm qualified to comment on. If you subtract more than the value of the work on this basis, any intelligent seller will immediately blacklist you from all negotiations because it would be entirely unreasonable. If you ever actually did this (tore up high quality work on the basis of lacking a permit) it would be phenomenally stupid. I hope you wouldn't seriously consider damaging your house because some mental reject at the permit office told you to.
I could see discounting it if the work was poorly done and you were going to need to redo it because they were bad at doing it. However, if the work was high quality such as what a builder or contractor might do in their own basement where they really give a **** about getting it right, there is no way they would even finish hearing an offer in which someone suggested that the discount should be more than the sum of:
1. Costs to go get a permit
2. Any penalties levied on late permits
3. A discount to reflect the time and hassle of getting a permit
Will it really keep you from enjoying the space or sleeping well if there someone drooling on a pencil in some office that doesn't have a record of what type of room is in your basement?
First of all, an unpermitted finished space cannot be counted as part of the finished square footage, so you should be able to get the property for a lower price. Secondly, when I have encountered this in the past, working for a buyer, we asked the seller to do everything to bring it up to code, then had it re-inspected.
Known unpermitted space may definitely be included in Triangle MLS listings (where the OP is) as long as the square footage and location of unpermitted space is identified in public listing remarks.
And, if a seller just does not know whether a permit was pulled by prior owners, they cannot disclaim accurately, but the space still exists.
And it pays a homeowner to keep all permit records, since the municipality may not keep them.
Caveat Emptor rules.
Some unpermitted work is awful. Some is fine. Most is in the middle.
Local codes and, more importantly, enforcement of those codes is entirely local. Heck, the enforcement aspect or whether or not any work done passes or fails inspection is, in reality, up to the individual employee doing the inspection.
If you suspect a serious enough code violation then a call to your town/city/county code enforcement office is free of charge. If fines are warranted then the government employees doing the inspections are more than happy to levy the fines and/or demand the fees for inspection/compliance be paid. Better the current/previous owner than you the buyer.
I'm curious to hear all the opinions, but this is the one part of the post I'm qualified to comment on. If you subtract more than the value of the work on this basis, any intelligent seller will immediately blacklist you from all negotiations because it would be entirely unreasonable. If you ever actually did this (tore up high quality work on the basis of lacking a permit) it would be phenomenally stupid. I hope you wouldn't seriously consider damaging your house because some mental reject at the permit office told you to.
I could see discounting it if the work was poorly done and you were going to need to redo it because they were bad at doing it. However, if the work was high quality such as what a builder or contractor might do in their own basement where they really give a **** about getting it right, there is no way they would even finish hearing an offer in which someone suggested that the discount should be more than the sum of:
1. Costs to go get a permit
2. Any penalties levied on late permits
3. A discount to reflect the time and hassle of getting a permit
Will it really keep you from enjoying the space or sleeping well if there someone drooling on a pencil in some office that doesn't have a record of what type of room is in your basement?
So you wouldn't be first in line to meet with the "mental reject" drooling over his pencil if YOU found your new house had unpermitted work?
Let me guess ... you had a bad experience as a contractor.
What are the implications of having unpermitted work on buying and selling residential property? Is there a statute of limitations? For example, in looking at homes for sale I have seen unpermitted room additions, unpermitted attic finishings, unpermitted decks, etc. Some of these are on older homes, at least 20 to 30 years old and the work simply does not appear on the county website as having been done. Sometimes the square footage is added on the county website, but a permit for the work cannot be found.
Can someone still buy the property, relying on the opinion of an inspector? Does one buy the property but discount all of the unpermitted work as if it had never been done? Does one subtract even more than the value of the work since it will need to both be torn up and replaced following a permitting process? What if the owner is a builder/contractor who did his own work?
What about when it comes time to re-sell the property? Does the problem become worse as time goes on, or does it go away since the house hasn't burned down (or whatever) after 30 yrs.
Please, what are the opinions of you experienced real estate agents (and contractors, if you are reading this)? And yes, I agree, that ideally everything was permitted, but you know that is not always true.
I would avoid buying a home that had work requiring permits that was done without permits. My friend was turned down several times for refinancing due to a room addition without a permit. She was finally able to do it when the government became involved with helping people to modify their mortgages.
And my contractor guy says: go to your building department and ask the implications because no matter how high the quality of work, you could be required to tear it all out after you purchase it.
This is one of those areas where the practical over rides the theoretical.
First off structural changes or changes that modify the square footage have to be permitted. And make the seller do it or don't buy. A bedroom extension into a garage can easily cost more to permit than it did to build. So all that stuff is permitted or you don't buy the place.
Other stuff is different. I have a bathroom and a pantry in my garage that were not permitted and will never be. I will disclose them to a buyer but no I won't permit them. I have very nice double french doors on my family room to the patio. They were not permitted and may or may not have needed to be. My prior home had two bedrooms formed from an upstairs bonus room. Never permitted and never came up in the sale.
Inspectors here and I think most anywhere have a disclaimer that they do not provide code compliance. And when you remember they only inspect the visible it is clear why you cannot count on an inspector for compliance.
Basically I would tell a client to consider how it was done...does it appear workmanlike and reasonable...and then buy it as is or don't buy the house. And don't ever buy it and then try to get it permitted. That is a fools errand.
<Basically I would tell a client to consider how it was done...does it appear workmanlike and reasonable...and then buy it as is or don't buy the house. And don't ever buy it and then try to get it permitted. That is a fools errand.>
Upon reading all of these above (and thanks everyone for your comments!) it seems there are two things going on here. 1. Does the job look like it was done well from what one can see, and 2. Are you the person who did the improvement or was it someone who came before you.
I personally might be willing to accept that the work was done properly. Perhaps the seller's friend was an actual contractor who did the work 15 yrs ago as a favor. But I guess my real problem will come if I want to sell the place 10 yrs from now. Bottom line seems to be that whoever is the current owner needs to take care of this. If he refuses, even if the house is wonderful, the buyer should give it up. Except Mike's comment makes me wonder if the seller can just say, 'yeah it was permitted but we don't have copies and the city no longer does either'. Does that just mean that the buyer would just go for it if there were no obvious flaws?
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