not permitted but does it add value?

[Renee Borne]

I have nonpermitted family room addition. I had a class and the instructor stated just because it is not permitted does not mean it has no value.

Then I ran it by some other appraisers and they told me not permitted, no value.

Is this what was taught in the past? Is there any website that has a good rationale?

thanks

 

[Restrain]

The prime example is the non-permitted basement apartment in San Francisco. It is common that they are not legal, yet they exist and are rented. A paired sale shows a contributory value when the non-permitted unit exists.

The fact that something is not permitted does not mean that it does not have value. The solution to the problem may be as simple as paying for a permit. In other cases, the non-permitted item has to be removed, creating a negative over and above the "value" of the non-permitted item.

So, the answer is, "Maybe". It all depends on the particular property, the laws, the degree of enforcement, and the market reaction to the item.

 

[Lobo Fan]

These situations vary widely from market to market. In my opinion such additions add some value. My question is how much liability to accept as an appraiser. If I include a non-permitted addition in the GLA, and I telling a reader that the addition is equal to the original structure? Am I telling a reader that no damage was done to the original structure when the opening was created and the extra weight was hung on the skin? Can I diisclaimer the thing and show some added value? Enquiring minds want to know.

 

[Lee Lansford]

The prime example is the non-permitted basement apartment in San Francisco. It is common that they are not legal, yet they exist and are rented. A paired sale shows a contributory value when the non-permitted unit exists.

The fact that something is not permitted does not mean that it does not have value. The solution to the problem may be as simple as paying for a permit. In other cases, the non-permitted item has to be removed, creating a negative over and above the "value" of the non-permitted item.

So, the answer is, "Maybe". It all depends on the particular property, the laws, the degree of enforcement, and the market reaction to the item.

That's my perspective on it.

 

[robert higgins]

It is common in multi-family units in my area, 2-family made into 3-family (finished attic, unpermitted). In most cases the unpermitted 3 family sell for more then 2-family and almost equal to legal 3-families.

 

[realbiz]

This is a tough question, it would depend on the markets reaction. But keep in mind that some cities, especially here in Southern California can come in and make you remove a nonpermitted addition. I have a REO property now I am working on that the city has filed a code violation on the property, with the demand to remove an unpermitted den. But, whatever you do with this nonpermitted addition be sure to spell out everything in the report several times. The last thing that you want is someone coming back to you later stating they did not know about the unpermitted addition.

 

[Renee Borne]

one problem is the addition looks really really non-permitted. it has a half bath and the toliet sits at the top of three stairs. It looks like a throne. i still can't figure out why that was done. If any one wants to see the photo let me know and I will send it to you. I might treat this as an unpermitted enclosed patio since the walls appear to be wood nailed to the studs and no insulation, etc. ugh. thanks for your help

 

[Renee Borne]

realbiz, I am calling the city tomorrow and will confirmed unpermitted and find out if there has been a code violation. Here in socal where I am if the city finds out nonpermitted they get really nasty and most I have seen the city wants it pulled down.

 

[CCAAMO]

There have been a lot of threads on this and there is no agreement. My opinion is no permits not value.

 

[Riick]

realbiz, I am calling the city tomorrow and will confirmed unpermitted and find out if there has been a code violation. Here in socal where I am if the city finds out nonpermitted they get really nasty and most I have seen the city wants it pulled down.

WARNING

Calling the City and effectively giving them a heads-up on a violation
can be a VERY sticky situation.

I would hesitate -long and hard- about giving them an address;
if they then want it torn down, or just hassle the owner as a result of the
phone call, guess who is liable to get a lawsuit aimed at them?