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Permit or no permit, does it make a difference in a sale of a home?

By
Real Estate Agent with RE/MAX Executives DRE SP00020610

The sellers didn't realize they needed a permit.  They had this extra space behind the bonus room and they thought a third bathroom would be a selling point.  His father-in-law was a building contractor from another state and they used a licensed electrician, but alas no permit.  Permit or no permit, does it make a difference in a sale of a home, it did this time!

We just lost a sale on the house!  We checked with the city where it is located and they refuse to issue a permit with penalty because they can't see the plumbing and electrical because they are behind the wall.  The home inspector is willing to come and do an inspection, for my seller, but the best he can do is simply report what the current situation is and that the electrical seems to be the correct gauge of wire and the GFCI works, etc. but he is not opening walls either.

Now we have to place it back on the market with additional disclosure since the seller didn't mention it when we asked the language in the seller's property disclosure form that says "have you made any alterations or remodeling without a permit?" and so we have to answer "YES!" we have.

It just gets better and better.  Any ideas how we could make this seem like it will be alright?  It has been in use for ten years and no problems except the heating register came undone and the valve froze behind the shower and the insurance company came in and made it all correct.  Does that count for anything?

Any thoughts would be appreciated.

If you are a buyer or seller, please think before you do anything to your home.  Call the local building department and confirm whether you need a permit, before you start!

Thanks!  You can write to me at Tim@TimBurroughsGroup.com.

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Comments(3)

Keith Vermilyea
Boise Homes Realty brokered by Found It LLC - Boise, ID

Hi Tim, I have encountered this issue before on both the listing and selling sides.  When the modification involves adding square footage I omit it from the total on the listing side and disclose it on the description as a bonus.  If it's a situation like you outlined all we can do is disclose it after the fact like you did.  I think it it is disclosed up front it doesn't become a deal killer, it's a psychological thing.  

In the Boise Idaho RE market I point to all of the historic north Boise homes, how many of those have permits?  Nonetheless there is no shortage of buyers for these old homes and they sell for a significant premium...

Nov 26, 2010 01:49 PM
Anonymous
Tim Burroughs

The shame of this is it is a newer house, less than 15 years old, in Meridian.

Nov 26, 2010 02:04 PM
#2
Fred Griffin Florida Real Estate
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

Two instances come to my mind:

1.  Owner in Central Florida made additions similar to your example.  The power was disconnected during the work.  Because they "sealed the wall" before getting the Check-Off from the building inspector, they could not get a Certificate of Occupancy.   They had to tear the wallboard off, then get the County Inspector to return.  Double the cost of not only the material and labor, and an extra $$ fee for the re-inspection.

2.  Fire in an "Enclosed Garage" in Tallahassee.  The Fire Department pumped thousands of gallons of water into the house to put it out.   Major smoke damage and water damage and fire damage.   Because No permit had been issued for the addition, the Insurance Company denied the Claim.

My suggestion, Tim - see a Real Estate Attorney before Listing or Selling this property.

Nov 26, 2010 04:42 PM