Conventional Loans & Unpermitted Structures

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Conventional Loans & Unpermitted Structures


Conventional Loans & Unpermitted StructuresReal Estate Question about conventional loans & unpermitted structures- I have a home with an unpermitted structure (An 1800sq Ft. Guest House) the property was originally bought years back with no guest home, and I am presently attempting to refinance with a conventional loan. I am wondering what the appraiser will do with the unpermitted guest house. There are numerous, unpermitted structures in my area. How should I handle this with the appraiser?

A Perfect Topic! “Appraiser are devoted to the lender, they are the so called “eyes and ears” of the lender. I am not an appraiser, but let me step in and play one for a minute. When it comes to structures that are unpermitted, the theory here is straightforward that if a structure is unpermitted, it cannot be protected through insurance, hence, not counted. Something that's not permitted cannot be insured since its unknown what building standards were applied or if was built to current codes.


Conventional Loans & Unpermitted StructuresThe lender must be protected in case there’s a problem and the lender needs to take the property back. If an appraiser gives the un-permitted structures(s) value, then there’s a problem and the bank gets the property, they bank/lender would lose out on any value given to the un-permitted structures. It's funny how things work sometimes; "the guidelines" The guidelines for most lenders are the appraisers, too and since all appraisers work for the lender, they work extremely close together?

To answer the question frankly, just be candid on what is permitted and what isn't, telling what you know is the best policy to take. If there are permits, please obtain copies of them, then that way you can hand the appraiser a copy which will be included in the appraisal.

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John & Irma Nelson
San Antonio Real Estate Broker/Agent with Get It Sold Realty - San Antonio, TX
San Antonio Real Estate Agents - San Antonio Homes

great article on a very sticky topic - i haven't run across one of these in a long time but good to know - thanks for sharing

Dec 19, 2012 08:26 AM #1
Michelle Carr-Crowe-Top 1% Diamond Certified Real Estate Team Sells Cupertino San Jose Homes-Just Call 408-252-8900
Get Results Team...Just Call (408) 252-8900! - San Jose, CA
Family Helping Families Buy & Sell Homes 40+ Years

I recently learned that a lot varies on whether it is an unattached and separate unpermitted structure as opposed to one that is attached.

Dec 19, 2012 08:31 AM #2
Jon Kolsky
Kolsky Realty & Management - Long Beach, CA
Licensed California Real Estate Broker

John & Irma~ I thought it was worth sharing too, every once in a while we'll run into this! Thanks!

Michelle~ that's interesting, although I am not an appraiser, it looks like I just played one....Thanks!

Dec 19, 2012 08:37 AM #3
John G. Johnston
John G. Johnston & Associates, LLC - Westcliffe, CO
An Exclusive Buyer's Agent ~ Westcliffe, CO

Jon  This just happened to me today.  I was showing a home that the listing agent showed 3 bedrooms.  I printed the Assessor's page yesterday and they only showed 1 bedroom.  Sure permit.  I wonder what the Realtors liability is when they advertise this?  Thanks

Dec 19, 2012 10:20 AM #4
Jon Kolsky
Kolsky Realty & Management - Long Beach, CA
Licensed California Real Estate Broker

Jonn~ who knows about the liability, most agent have E&O insurance??? But what a joke and waste of time...thanks for sharing and making my blog better!

Dec 19, 2012 02:13 PM #5
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