Should I buy a Home With Unpermitted Work?
Have you been noticing that a good amount of properties that you’re interested in have unpermitted work or that the permitting is unknown by the seller?
Unpermitted work is actually pretty common. The main issue associated with unpermitted work is that your lender's appraiser may appraise the property for less than the amount of what you agreed to pay the seller. If a property appraises for less than the agreed upon purchase price, you have a few options. You can either come up with the difference in cash of your own, negotiate the purchase for a lesser price with the seller, or cancel the contract entirely (your appraisal contingency allows you to do this without penalty).
If you are able to purchase the property with unpermitted work, you can apply for a permit with the city. Some cities will require a mandatory inspection of the permitted work prior to issuing a permit, and this is really just to make sure the work is up to code. We have found that many of the properties that are for sale with unpermitted work were actually purchased by the seller without permits.
We encourage you to double check with your lender on how unpermitted work could potentially be a issue for you in regards to your financing.