Will homeowner remodeling nix a loan possibility? Maybe.

Real Estate Broker/Owner with Cornerstone Business Group Inc 0225086119

The clients I am currently working with are scrambling to buy a house before leaving the country for a year. Their time-line is tight and they are trying to see everything that comes close to their list of desired needs, wants and options lists. They have found a few homes that were recently remodeled and looked fabulous. 

There was one problem. The homeowners did, or had the work done, without permits. Being a contractor, it only takes a few minutes in a home to know if the work done was inspected by a local inspection agency. The first one these clients found had nearly everything they wanted. But, it was remodeled without permits and some of the work would not pass inspection. The VA said no to financing it. The work could be reconciled with the county, but the owners were not willing to have the county inside their home. 

The second one, I knew immediately that it had been done without permits. There were enough electrical issues that showed poor trade-craft that I knew an inspector had never been in the house, and I was right. Take that one off the list. Of the six on our list, 50% would not qualify for their financing based on how the remodeling was done. 

Before you take a client out to see a remodeled home, it might be worth a minute to ask the listing agent if the work was done under a local permit with a final inspection. The first house had a electrical issue that was a dead giveaway, and it would have been nice to know that before traveling forty minutes one way to learn that. Lenders are only trying to protect their investment and your buyers should have that same desire.


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Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce

We check with the municipality...our highest and best source...agents can be clueless...and sometimes Sellers...wellllll

Jun 24, 2019 05:03 AM #1
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good morning Mike - that is a big issue here in New York.  Sometimes architects and planning boards have to get involved.

Jun 24, 2019 05:40 AM #2
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

Over the years I have seen my share of homeowner DIY projects that haven't been up to snuff, or out of code.  It can nix some loans for sure.  I've had to seek other financing in some instances on properties that wouldn't qualify for FHA or government financing.

Jun 24, 2019 05:02 PM #3
James Dray
Fathom Realty - Rogers, AR
Exceptional Agents, Outstanding Results

Morning Mike.

Frankly, I've only ran into this situation once.  It was so obvious, pity, it was a nice home.

Jun 25, 2019 02:30 AM #4
M.C. Dwyer
Century 21 Showcase REALTORs - Felton, CA
Santa Cruz Mountains Property Specialist

In my neck of the woods, many remodels are done without permit.    It makes my work challenging...a competent home inspection is a necessity!

Jun 27, 2019 08:25 AM #5
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Mike Cooper, GRI

Your Neighborhood Real Estate Sales Pro
Winchester has a place for you! Call me.
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