Properties with unpermitted work are actually quite common. The biggest issue most buyers encounter regarding unpermitted work is with their lenders. Most lenders will require an appraisal of a property before underwriting your loan. It’s possible that the discovery of unpermitted work done to the property could lead the appraiser to value the home at an amount that’s lower than what you agreed upon purchase price. If this happens, you have a few options.
- You can come up with the difference in cash of your own.
- You can try to negotiate a lower purchase price with the seller, or
- You can invoke your appraisal contingency and cancel the contract entirely (without penalties).
If you decide to move forward with the purchase, you can apply for a permit through the city. Some cities will require mandatory inspection of any permitted work to ensure that the work is up to code before issuing a permit for the work done. Please note that bringing unpermitted work up to code or removing it altogether can be costly. As such it’s a good idea to be thorough about investigating any property you are thinking of buying before you make an offer. Having your agent request disclosures is a great way to get a head start on that and help avoid any issues such as these down the road.