No Above Grade Kitchen (only An Illegal Kitchen In The Basement)

[thowe1]

I recently performed an appraisal inspection of a single family ranch home in Chicago.
The main level above grade kitchen had been removed and the only kitchen present was located in the below grade basement.
I spoke to the City of Chicago who confirmed that were no permits on file for the basement kitchen, so it is illegal.
It should be noted that a second kitchen located in the basement is common for the area.

This is for a purchase transaction and there were 10 offers at or near list price, suggesting perhaps the lack of an above grade kitchen does not indeed have an adverse effect on demand or marketability. The sale price of the home is in line with similar homes which recently sold and only have above grade kitchens.

I've received different suggestions on how to proceed from my local peers. Some say to complete the report Subject To the above grade kitchen being reinstalled. Others say to complete the report As Is with a cost to cure (in line with the labor cost to transfer cabinetry and appliances from basement to main level). While others suggest completing the report As Is with no cost to cure and no obsolescence observed due to the lack of market resistance to a "basement only kitchen".

My client suggested I complete the report Subject To but even they were not 100% sure.

Any thoughts would be greatly appreciated !

 

[Terrel L. Shields]

I would think subject to a proper permit the best route... never mind you'll be pillared by the reviewers and a little hissy fit will ensue from agents involved.

 

[Meandering]

It's not an illegal kitchen.

It did not break the law.

It's an un-permitted kitchen.

Agree with Terrel, "subject to" getting it rectified with the permit office.

.

 

[Michigan CG]

This is for a purchase transaction and there were 10 offers at or near list price, suggesting perhaps the lack of an above grade kitchen does not indeed have an adverse effect on demand or marketability. The sale price of the home is in line with similar homes which recently sold and only have above grade kitchens.

Sounds like the market doesn't care if the kitchen is in the basement.

Completing the appraisal subject to installing an above grade kitchen is not an option IMO. Subject to permits appears to be the answer.

 

[J Grant]

Lenders want as is reports unless it is a health/safety issue that needs to be subject to curing...which this is not.
Though I have no idea if the kitchen was installed properly re vents for smoke, stove etc if in a basement and done without permits....would the lender care? Perhaps either make it subject to inspection, or recommend an inspection?
I would not make it subject to retrofitting kitchen back on main level...a very expensive project and one I doubt the owner would fulfill.

As far as price/value, the buyers seem to be fine with property and willing to pay for it as is. I would disclose , explain etc, and do the report as is, with perhaps an inspection of electrical and other systems for basement kitchen....perhaps ask client about that. .

As far as lending on the property, that decision is out of your hands. The main challenge I see is that clients often demand you bracket such an unusual feature..start looking for a comp with a basement kitchen! (if nothing else, a second kitchen in basement might suffice as a comp)

 

[Slappy]

Interesting situation. I think I had one similar to that years ago. I would think that I would go the "subject to" route. An "as is" with cost to cure to relocate the kitchen is a similar choice. Ultimately, this will probably have to be a "hard money" or all cash deal as a conventional lender would have problems with the situation. I would clearly communicate to the client what I would have to do and offer them the cancel after inspection option. I have found that it is sometimes easier to walk away with an inspection fee rather than have to explain over and over again to bank and AMC people my methodology.

 

[residentialguy]

Arrest that kitchen!

 

[thowe1]

Arrest that kitchen!

Im quoting the City of Chicago who calls the kitchen "illegal".
Funny how they were quick to call it "illegal" before they even looked up permits.

 

[J Grant]

Read the OP post, they called the city, there is no permits.

 

[Rlong]

The Kitchen jails are full!

Just because they are unpermitted doesn't mean they're "radicalized illegal kitchens"!