Tonight's Discussion Is Brought To You By "unpermitted Finished Attic"

[DonRico]

Lord, I hate these kinds of Purchases. It's been so long since I've done one of these No Permit Deals.

The Subject is a little 2 bedroom ranch, 70 years old. The owner has finished the Attic into a bedroom and a full bath, functional to be sure, but lacking the all-important permit from the Building Dept. The real value on this purchase is the size of the Parcel, my fistfull of Comps are all on large Lots.

Do I report only the first floor GLA ?? Show pictures of the finished space in the attic and mention the lack of permit ??

 

[Michigan CG]

Does the market recognize the finished area as having value?

 

[DonRico]

The market certainly recognizes the utility of the space. The bedroom upstairs makes this a 3 bedder rather than a 2 bed. I honestly forget what the proper procedure is with this non-permitted work.

I think the value here is the size of the Parcel.

 

[glenn walker]

Just a thought because there are many ways to handle this .

in some cases I simply call these areas a bonus room and do not include it in the GLA or room count and place it on a separate line (grid) I may give an adjustment for superior utility or contributory value. But if you cannot really extract an adjustment don't make one up simply state in your narrative the area was completed (if so) in a professional and workmanlike fashion and no health or safety issues were observed and no negative effect on the sale or marketability. Or in your opinion the area has a overall positive effect on the sale and marketability because even though no permit was found the market area recognizes and uses finished attics for multiple uses including bedrooms, game rooms, dens or home offices BUT no supportable adjustment was able to be extracted since most MLS listings and the local Realtors normally do not report non-permitted areas, therefore this area was considered but no separate line item adjustment made. ** Kind of like enclosed patios, work-shops, garage conversions into accessory units etc .

Sometimes it's just not possible to extract a real supportable adjustment and I would rather defend no adjustment than one made up ** In theory you could go back for years looking for an unpermitted attic area but in the real world it rarely works very well .Now I will sit back and wait for my fellow appraiser to attack me : ) LOL

 

[DonRico]

Glenn -- I think that's a good approach and I will probably go that way with the attic space.

I'm going to spend more time researching the Site Adjustment -- the Subject is 1.38 acres, might be the largest parcel in that part of town. It's not inconceivable that this 70 year old house gets bulldozed and the Lot gets sub-divided.

 

[glenn walker]

Agree sounds like you have this done .

 

[Mark K]

Since I live in an area that is very casual about permits I don't have much experience...but...couldn't the existence of a non-permitted area result in a liability?

IDK, but it seems like the permit Nazis could force some type of enforcement including monetary fines and demolition or removal of the offending improvements. Even if the market doesn't care I think you would want to CYA.

I'm not convinced that saying that it contributes no value is sufficient. I think you have to analyze the contributory value (which probably exists to the typical buyer) but also discuss the ramification of the lack of a permit.

The last one I appraised that had a significant violation was a SFR on 40 acres, house sitting 1,000 feet off the road in the woods, and the owner had built an additional duplex on the site without permits. Assessor was aware of it but no permits had been issued and the duplex was 24 years old. I reported the value subject to an EA that the present use as-is would continue. In this area, worst case, is the building dept. might require an inspection and pay for a permit, no big deal. In Kalifornia, my understanding is that they are not so lenient.

 

[Terrel L. Shields]

IDK, but it seems like the permit Nazis could force some type of enforcement including monetary fines and demolition or removal of the offending improvements. Even if the market doesn't care I think you would want to CYA.

Zoning in most small towns did not even occur until 1950s and 1960s. So to me the first question is whether or not this home is even required to have "permits". There are still plenty of houses in plenty of places where they were grandfathered in. It is only newer construction that is impacted by same.

 

[Mark K]

Zoning in most small towns did not even occur until 1950s and 1960s. So to me the first question is whether or not this home is even required to have "permits". There are still plenty of houses in plenty of places where they were grandfathered in. ...

Playing devil's advocate (the devil being most gov't/muni bureaucrats)...

Doesn't that lead to the "what came first, chicken/egg" discussion? How does one know if the additions/modifications in an old house were completed before or after the creation of the zoning regs?

 

[Terrel L. Shields]

Doesn't that lead to the "what came first, chicken/egg" discussion? How does one know if the additions/modifications in an old house were completed before or after the creation of the zoning regs?

Yep, and why many municipal governments would rather be Sgt. Shultz rather than Commander Klink.