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Owner Said That No Permits Were Obtained

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NJ Valuator

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Feb 23, 2003
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Certified Residential Appraiser
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New Jersey
Garage converted into GLA and a bathroom was installed; no permits for either per owner. If an owner is going to admit that there are no permits, would you still contact the municipality to confirm? Logic would conclude that if an owner is going to admit that there are no permits than it is a safe bet to believe that to be the truth. Why would an owner lie about that?

Is there any requirement anywhere that the municipality MUST be contacted to verify if permits were obtained? If the owner him/herself says there are no permits is that good enough?

Can the property still be appraised "as is" if permits were not obtained with the statement per the owner no permits were obtained for the conversion/bathroom?

BTW work was done in a professional manner consistent with rest of the dwelling.
 

Terrel L. Shields

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Arkansas
Can the property still be appraised "as is" if permits were not obtained with the statement per the owner no permits were obtained for the conversion/bathroom?
If you trust the owner to be "right"? And, so I would check to at least know what the permitting body would do if found out. Read your Fannie guidelines regarding unpermitted spaces.
 

NJ Valuator

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Feb 23, 2003
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New Jersey
If you trust the owner to be "right"? And, so I would check to at least know what the permitting body would do if found out. Read your Fannie guidelines regarding unpermitted spaces.

I read Fannie Mae and only found the following:

Additions without Permits
If the appraiser identifies an addition(s) that does not have the required permit, the appraiser must comment on the quality and appearance of the work and its impact, if any, on the market value of the subject property.
 

hastalavista

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May 16, 2005
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Certified General Appraiser
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California
I read Fannie Mae and only found the following:

Additions without Permits
If the appraiser identifies an addition(s) that does not have the required permit, the appraiser must comment on the quality and appearance of the work and its impact, if any, on the market value of the subject property.

It is a little more than that (not Fannie's guidance, but the research).
A non-permitted alteration that would be permitted is, IMNSHO, consistent with the allowable use.
A non-permitted alteration that would not be permitted is, IMNSHO, likely an illegal use.

If I can convert my garage and all it takes is a permit to do so, my non-permitted use is conforming to what is allowed; I just need the permit.
If I can convert my garage, but to do so, I have to have a substitute garage... and I don't have one and there is no place to reasonably put one on my site.... then I have a bigger problem. I've altered the improvement in a manner that would not be permitted. As-is, it is not a legal use (homes with no garages are never permitted).
The permissible but no permit obtained garage-conversion would be analyzed a lot different than the non-permissible, illegal garage-conversion in almost all cases.

...so I would check to at least know what the permitting body would do if found out.
Me too!

Good luck!
 

J Grant

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Dec 9, 2003
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Certified Residential Appraiser
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Florida
There have been lots of posts on this topic (look up old threads), and Fannie has guidelines about permitted/vs non permitted , what they accept as GLA etc.

Personallly, if owner tells me they have no permit, I believe them. I might do a quick online search ( we have online permit search)

Non permitted yes can be appraised "as is",

Going on from there, a garage converted to living area, I don't typically include it as GLA ( even though it serves as living space utility ), though there are exceptions....exceptions is if the work is so integrated into the main dwelling, and no traced of former "garage" like elements remain...aka door removed, floor on same level , (no longer a step down etc). That is my personal criteria derived from my market, not official Fannie...Fannie far as I can tell has a grey area of what they accept as GLA when no permits are present (of course, why should it be clear ) ..wish I could bring up the link segment to Fannie but don't have time to look for it.

Fannie generally wants ( and most clients want), at least one and prferably two comps that show similar conversion space as your subject...whether you choose to include it in GLA or adjust for contributory value of converted garage on a separate line item, they want to see 1 or 2 other comps with similar non permitted area...that is where these assignments become a PITA.

Then, if your subject now lacks a garage, they usually want at least one comp with no garage.

One of my least favorite assignments is one like this , not that complex but a PITA looking for the right comps
 

Fernando

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Nov 7, 2016
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Certified Residential Appraiser
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California
Are you crazy to contact the building department abut an illegal converted garage! You going to get yourself and the client in trouble.
Whenever I'm not sure, I go to the building department and check on the permits. I do that all the time.
Even if the owner says it's done with permits, I would ask for permit number and if lender ask, you better be sure you have permit number.
Sometimes I don't believe the owner and I go and check at the building department.
If you don't see the permits then it's illegal and you can't add it to gross area.
This is where it gets tricky. The client from HELL will want a comp with a similar illegal conversion.
I've been lucky to find such comps as I can remember because I'm goood.
Nevertheless, whenever I see properties with illegal construction, I try to avoid them or charge a high premium fee.
 

Carlos Danger

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Jul 25, 2015
Professional Status
Certified General Appraiser
State
New Jersey
Find another line of work. You are not cut out for this.
 
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