Should the appraisal note any unpermitted construction?

[bavajose]

I am new this forum, so I apologize in advance if this has been posted before. I searched the forums for a while but I could not find exactly what I was looking for.

I bought a 2bed 1ba house about three years ago. I refinanced the house about one year ago. No problems with the appraisal in any of them. Both appraisers indicated the house had a 1 car detached garage.

I found out early this year the garage is supposed to be a carpot and is not permitted. To make things worse, present code requires any new garage to be a 2 car garage and I do not even have the space for that. After a real fight with the city I managed to get the approval for the reconstruction according to code of the garage for only 1 car as it was.

What I am trying to figure out is this, shouldn't the appraisal report indicate this discrepancy between city and county records and the real thing? I mean, if had known this from moment one I would not have bought the property probably or I would have paid a lot less for it. Is it possible that no one is responsible for something like this hiding in the entire process? As everything starts with the appraisal before you get the loan confirmed, that is why I am asking.

thanks!
jose

 

[The Warrior Monk]

What I am trying to figure out is this, shouldn't the appraisal report indicate this discrepancy between city and county records and the real thing?

Many appraisers do not check for the Certificate of Occupancy, Certificate of Compliance(s), permits, etc. Sometimes it's simply not available.

I mean, if had known this from moment one I would not have bought the property probably or I would have paid a lot less for it. Is it possible that no one is responsible for something like this hiding in the entire process? As everything starts with the appraisal before you get the loan confirmed, that is why I am asking.

This should have been caught at some point along the line. Typically lenders and/or title companies will catch these types of things. A certificate of occupancy, updated survey, and various other documents are required as part of closing, and are checked against what actually exists on the property. However, mistakes are still made.

As far as the buyer goes, caveat emptor. If there is something that would cause a buyer not to buy a property, the buyer should be checking into the matter him/herself.

 

[Walter Kirk]

The appraisers job is to determine the market value of the property, not to determine whether the previous owners of the property have jumped through all of the government hoops. If the improvements contribute value to the property, or diminish value, they must be considered.

 

[TRESinc]

appraisers are not the permit police. it appears as if you are trying to find someone to lay the blame on. it was your money being invested in the property, you should have done your due diligence but didn't.

you may not like the sound of it but you made your bed...

 

[bavajose]

What if the certificate of occupancy is mandatory in this city?

thanks for your reply David,

Here in Pasadena the city's certificate for occupancy inspection is mandatory. In theory, it is not possible to sell a house without this certificate by the city.
Does this change anything the role that appraiser has in the entire process?

I agree about me being the one that has to check everything before buying, but I had been in the US only for 5 years when I bought the property. I assumed regulations were way more strict than where I come from. I never imagined something like this could go unnoticed to every single part involved and I had no idea about the occupancy inspection when I bought the property... though both real estate agents and I guess the appraiser should have...

 

[TRESinc]

it changes nothing for the appraiser however it does give you a possible person to go after, namely whoever issued the cert by the city when you purchased the home. with any luck they will still be working for the city.

stop trying to blame the appraiser, it was not his job to check for permits. do you blame the guy who sells you gas when the prices increase daily? his job is to sell gas, not set the price. the job of the appraiser is to determine a credible opinion of market value not check for permits.

you only have yourself to blame. ignorance of the issue and local codes is no excuse.

 

[George Hatch]

The role of the appraiser is to gauge the market's reaction to these various attributes, using a comparable level of diligence such as is exercised by typical buyers in that market. It is not to perform permit searches or code compliance assessments or other functions that are normally performed - at substantial cost - by professionals working under other occupational specialties.

All appraisals are based on certain standard assumptions and limiting conditions. There is no such thing as an appraisal that isn't based on assumptions and which are offered without any limitations.

At issue here is whether or not it was reasonable for an appraiser to see this garage and question it's legal permit status. As a buyer you obviously didn't question it, and apparently neither did the other two realty agents who participated as listing and selling brokers in the transaction.

In my experience most appraisers, agents and buyers for single family homes would have never thought to question the permit status of an old 1-car garage on the property that was likely built prior to that time period when the database for Pasadena's building permits starts, which as I recall from some years ago was sometime in the 1980s. I don't know what that date is, but whenever their online database starts any improvements made prior to that wouldn't necessarily be available to an appraiser even if they inquired.


At any rate, the effect on value on a (presumably) older single family home on a (presumably) narrow lot that's not wide enough to squeeze another parking space on it would be fairly limited; even within the context of the heady pricing for homes in the city of Pasadena. So the maximum amount of damages that could be attributed to this situation would be fairly limited - enough to fall within the normal range of value indicators demonstrated among the comparable sales anyway.

So even if you could blame the appraiser - and nobody else - for not somehow magically sensing that this particular improvement had no permits and would cost a grand total of maybe $1000 to get permitted on a retroactive basis, the damage to you for such an error or omission would be negligible.

AND BESIDES ALL THAT, the other thing you need to recognize about this appraisal is that if it was engaged by a lender for use in underwriting a mortgage then you are not the appraiser's client, you are not among the intended users for this appraisal report, and you did not rely on this appraisal when making your decision of whether to buy or how much to offer., So trying to rewrite that history isn't going to work.

That appraisal was engaged by the lender for their benefit and use, not your's. If they have a problem with it they can take it up with the appraiser. At most you would just get to watch from the sidelines.

 

[BRCJR]

appraisers are not the permit police. it appears as if you are trying to find someone to lay the blame on. it was your money being invested in the property, you should have done your due diligence but didn't.

you may not like the sound of it but you made your bed...

I did not think the same as you.

I thought the OP was someone that did not understand how something like this happens and was wondering about the process.

 

[Tim The Enchanter]

shouldn't the appraisal report indicate this discrepancy between city and county records and the real thing?

The appraiser probably used county records from Realist or Realquest, same thing 2 versions. They do not always show garage or carport. Some times it says on site parking, or nothing at all. So, what discrepancy?

I thought Pasadena required a city inspection whenever a property was selling. Maybe not.

Hey, at least they approved it as is, and didn't make you take it down.

 

[HF Mudd]

The following is part of the conditions every appraisal (red added for emphasis:


STATEMENT OF ASSUMPTIONS AND LIMITING CONDITIONS: The appraiser's certification in this report is subject to the following assumptions and limiting conditions:

1. The appraiser will not be responsible for matters of a legal nature that affect either the property being appraised or the title to it, except for information that he or she became aware of during the research involved in performing this appraisal. The appraiser assumes that the title is good and marketable and will not render any opinions about the title.