Appraising A Non-permitted Addition On A SFR

[Joe Tuckey]

Greetings, I am currently doing an appraisal on a SFR which has a non-permitted addition that has been done in a "workmanlike" manner. What is the best way to handle this appraisal? Can the additional square footage be included in the total living space due to it acceptable quality of construction or do I simply leave it off of the total living space since the building department has yet to permit it?

 

[Joshua Fookes]

Hi Joe, nice to see you here at the forum, it's a great place to learn,

I'm not sure what a "workmanlike" manor is. How would a "typical buyer" respond to the addition? What would the governing authority do if the unpermitted addition was discovered by them? Would they force it to be removed? If so, then you don't want to attribute possitive value to something that could in fact become a liability to a future owner.

If you're talking Shasta County then you might be able to find comps with unpermitted additions. I've come accross a few in my short appraisal career. Another thing in Shasta County is they will generally allow it to be permitted if it has been built to code. The person can pay a small fine, and then buy the permits. Call the building department and they can give you an idea of what it would take. If you're talking Redding, then they are a bit more critical and that can get hairy; but still, call the building department and see what it would take to make it fly.

What does the market tell you? How are the building codes enforced in your area. If you're talking Trinity County, I've come accross some trouses out there that haven't been permitted for half of the improvements.

I come accross garages quite a bit in Redding. City and county are sticklers on those. I do a cost to cure to restore the garage function. Garages are usually a couple of walls and some floor covering, cheap to tear out and dispose of.

can you give any more details that might help?

Blue1 can help in this area too. Where are ya Bruce?

Josh

 

[Colorado Guy]

I have discussed this at length with my mentor - bottom line - does it add a value to to the home and is the construction similar to that of the subject. And document! You are going to have to explain the difference in square footage between county records and your appraisal. I have had a review appraiser ask for just such an explaination

 

[Richard Carlsen]

Not sure what you mean by Non-permitted addition: are you saying that the addition was put up without a building permit or that they are running a brothel out of the room that has been added?

As far as the addition without the building permit, you are there to appraise the house so appraise the whole thing unless the county normally requires non-permitted additions to be torn down. I would (and do) include additions in the GLA despite the lack of a building permit. Happens all of the time.

BTW, why do check for building permits? Seems to me that doing so is not really germaine to the appraisal process and would take a lot of time. Your appraisal report is not a building inspection. It is safe to assume that all construction was done IAW local laws and codes unless you somehow know different. If you somehow know something, put it in the report. But regardless of how the addition got there, you should consider it in the sq footage because it is there, legal or otherwise.

 

[Joshua Fookes]

unless the county normally requires non-permitted additions to be torn down.

That seems pretty key here.

If the county or whoever, would not tear it down, then yes, I would just mention the addition and include it in GLA.

It's been said before by the "old guy" that we aren't the permit police. I agree we are not.

But if you live in an area where they might force you to tear down an unpermitted improvement, or you don't know if they will tear down or not, then I think due diligence would force you to find out when you are made aware of a situation.

Sometimes the agents will put information in the MLS about non permitted improvements. Other times I have had the owner tell me. Don't ask me why?

You can get around it by assuming that the work is done by permit and to code (if you don't know either way), and that interested parties may wish to investigate the matter further.

Then, move on.

Joshua Fookes

 

[hal380]

My $0.02.5??

We are not there to do title searches, geographic surveys, home inspections, pest inspections or permit histories. BUT if something is so egregious as to jump out and bite us in the butt, then I think we should comment on it and call for additional investigation.

As an example, if I see termite mud tunnels running up the basement walls and along the floor joists, I would report it, even though I am not doing a termite inspection. I would not report any conclusion as to whether this represented current termite activity or the evidence of past activity which has been arrested by proper treatment, because I am not an expert in termite infestations and structural damage.

If I saw the subject's garage "Looked" like it was over the property line onto the neighbor's property, I would note it.

A good question here is,

How did you know the use was unpermitted??

Did you go fishing? Or did the home owner just run his mouth off? If the homeowner told you, I would simply report it and indicate that home owner was my source and further verification was necessary. Again I would express no conclusion.

Again just my opinion.

Regards

Hal

 

[Jungle Boy]

In my opinion it depends on the neighborhood.

Is the nonpermited addition typical for the neighborhood?

If so, include the extra footage.
When you inpect the comps, make notes on whether they may have also been modified. Gotta compare apples to apples.

 

[Karl]

First all welcome to the Forum U have signed the petition? You are a Appraiser U are not the County Inspector U are not the Zoning Commissioner. U are not a licensed Contractor, U are not the Building & Safety Officer, U are not a licenced Surveyor, U are Not -------- fill in the blank Hopefully this will get my point across. Seems many Appraisers seem to think that they need to be more than a Appraiser of Real Estate, just make a disclaimer of all things U are not.

 

[Mike Garrett RAA]

Had one just recently, couldn't find where an addition had a permit. Owner claims it was done with a permit..regional building department has no record. Seems contractor lied to the property owner. In my county, the most that will happen is the county will require the necessary inspections be done. My opinion? We are there to appraise the real estate. Please don't ask me to be the home inspector, termite inspector, and/or code enforcement officer. I will tell you in the appraisal that there was no record of a building permit; however, it appears the addition was done in a "workman like manner" and is compatible with the rest of the improvement. Include it in the GLA.

 

[J in Florida]

This has just recently come up with me twice. On the first one, a family room addition, that you would never know was an addition if someone had not told you, did not show up on the property appraisers records. The investor told me to take it out of GLA. I said no.

The second one was a subject with 4 bedrooms, the tax rolls said 3, the investor required that I call it a 3 bedroom home or provide the permit for the 4th bedroom. I said no.

In my opinion, if the lender/investor is going to require permits for the property, would it not be the borrower/homeowners responsibility to provide the permit?

If the subject has a new roof, new CHA, new electric, total renovation, etc do we have to provide permits for these as well? Where would it end?