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Why, oh why don't and won't sellers get permits?

By Pacita Dimacali

Real Estate Agent with Alain Pinel BRE 01367196

February 18, 2009 11:42 AM

I met with a prospective seller today. He has bought and sold several properties through the years, and he delights in finding fixers then re-seling them at a good profit.

But while going through the improvements, I asked whether or not he got permits for the work he has done:

New foundation. Yes
New roof. Yes
Sewer lateral test and replacement. Yes
New double pane windows. No
Remodeled kitchen with new granite counters and new fixtures. No
Upgraded electric and plumbing. No

And...he didn't have a stove. Told him that if a buyer is going to get an FHA loan, FHA requires a functional kitchen, and therefore, it must have a stove. So he agreed to buy a stove, albeit a little reluctantly.

But what about the rest? He doesn't want to have to "fight" with City Hall to get the permits and inspections. And he wants to sell AS IS.

Deal breaker

It makes me nervous that many of the improvements were done without permits because in a previous escrow, this type of situation almost became a deal breaker.

If the buyer really wants this property, he would have to get permits and inspections after the fact, and hope the work was done according to code, and that they will be approved without significant fines. The worst scenario is for the City to insist on removing all the work done without permits, and still impose citations and fines!

Why, oh why didn't he get permits?

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Terry Chenier

Homelife Glenayre Realty - Mission, BC

Especially on electrical; no permits will probably void insurance if the worst happens.

Feb 18, 2009 11:49 AM

Deb Clifton

Coldwell Banker Advantage - Clayton, NC

Broker/Realtor, e-PRO, CNS

Just went thru the same thing. So frustrating. My sellers bought the home several years ago, the couple before them had finished some unfinished space. My sellers, before they put it on the market, had to get everything inspected and a permit pulled. Was expensive and should not have happend. The agent that sold them the home never caught it.

Feb 18, 2009 11:54 AM

Bill Driscoll

RE/MAX Realty Affiliates - Gardnerville, NV

GRI, CRS

Most "Do-it-to-yourselfers" take pride in circumventing the system and have no idea of the long term consequenses. Many think that obtaining a permit will raise their taxes, and in some cases that is true. The reason they are doing it them selves is to save money, so lets save some more and forget the permit. This is a issue we, as Realtor, need to make an effort to educate our customers and clients on.

Feb 18, 2009 11:55 AM

Edward & Celia Maddox

The Celtic Connection Realty - Queen Creek, AZ

EXPERIENCE & INTEGRITY - WE TAKE THE HIGH ROAD

I agree. Most people too cheap to hire a professional, are also too cheap to apply for a permit. They are setting themselves up for future problems in selling their home. Not so cheap in the future.

Feb 18, 2009 12:13 PM

Tim Bradley

Contour Investment Properties - Jackson Hole, WY

Commercial Real Estate Expert in Jackson Hole, WY

I see it all the time as an appraiser. I just appraised a multimillion dollar property where the new buyer undertook extensive structural work and added living spaces to a barn without pulling the permits. And then they get upset when I disclose this to the bank.

Feb 18, 2009 01:59 PM

Michelle Tucker ~ Pooler Real Estate

!Daley Real Estate - Pooler, GA

Rincon~Savannah~Richmond Hill

Pacita: I have never been faced with a situation yet. But now, I will always keep this in mind when listing and selling. Ask if permits were obtained for work/remodel projects. Thank you for the advice. Keep us posted on the sale and how the situation turns out. Best of luck selling your Contra Costa listing.

Feb 18, 2009 02:26 PM

Richard Weisser

Richard Weisser Realty - Newnan, GA

Richard Weisser Retired Real Estate Professional

Pacita...

It seems logical, but most sellers don't want to go through the trouble. I think that local governments should try to streamline the process and make it easier and more affordable to get inspections done, so sellers don't deliberately try to avoid them!

Feb 18, 2009 11:15 PM

Susan Gonzalez Faux painting murals atlanta

Marietta Mural & Decorative Design - Atlanta, GA

Not worth the trouble then,....but he's asking for a lot of trouble now....thanks for the post

Feb 19, 2009 12:46 AM

Pacita Dimacali

Alain Pinel - Oakland, CA

Alameda/Contra Costa Counties CA

Terry --- the electrical probably is my biggest concern since the whole place was re-wired and re-plumbed, considering that when he bought it, it was a total fixer without a working kitchen.

Debbie--- sometimes, listing agents aren't told everything by the seller. However, permit history should be available to the public if someone just takes the time to get it. In Alameda, we have online access to permits (most of it, anyway) via www.velocityhall.com

Bill --- and educate, we try. Perhaps on deaf ears, but we shall keep on trying.

Edward and Celia --- how does it go....either you pay now, or pay later?

Tim --- you too? They get upset when we suggest a price lower than they want ;)

Michelle --- give it time. You'll run into this problem at one time or another. Forewarned is forearmed.

Richard --- if cities' permit and building departments would take on a more consultative role instead of the gotcha role, then owners may be more inclined to go there.

Susan --- so many of these people are doing this. We can only try to make them see the light.

Feb 19, 2009 04:12 AM

Myrl Jeffcoat

Sacramento, CA

Greater Sacramento Realtor - Retired

Pacita - One of the things that concerns me in the current market, where a large percentage of homes are bank owned or foreclosures, is NO disclosure is available, and they are generally sold "as is". . .It is imperitive to have inspections performed! You don't even have the opportunity to ask the seller about permits.

Feb 20, 2009 12:37 PM

Myrl --- there are ways to find out about permits, but it will necessitate a visit to the local permit or building department. In our city of Alameda, we are fortunate that the City has signed on to www.velocityhall.com (the only one in California to date) where we can research permits on specific properties.

But all this research will take time. So it's up to the buyers and the agents to join forces and get some of this critical information. My buyers in Oakland backed out of one REO when we found out that a lot of the work done to the property was done without permits. Knowing how strict the
City is, it wasn't worth buying low, if the City will cite the property (and impose fines!)

Feb 20, 2009 04:01 PM

Why, oh why don't and won't sellers get permits?

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