How to Sell a House With Unpermitted Work
It is well-known that some upgrades increase home value and price before selling, as long as they are done with a permit. But what happens if they aren’t? What are your options if you want to sell a house with unpermitted work? Can you even sell it? Of course, you can, but you should be prepared for all the process entails, especially if your best and quickest option to lift this burden is selling your home with unpermitted work at a discounted price.
What qualifies as unpermitted work?
Unpermitted work is any construction work on a home that isn’t approved and made legal by the local authorities. Upon review, city or county ordinances make the construction legal by issuing building permits.
Why are construction permits necessary?
Building permits are the last step in ensuring that specific construction work is done by local standards, satisfies building codes, and meets minimum safety requirements. Without them, residents would experience personal injuries and property damage more often.
Permits also determine liability for the quality of the renovation. If a resident is injured due to poor quality of work, a contractor is held accountable.
Why was the permit not obtained in the first place?
It takes time to get a building permit. Most homeowners have tight schedules or need to renovate, sell and move out on short notice. To say bluntly, they don’t want to wait weeks to obtain the necessary approval. Some owners are unaware that the works they plan need a permit. Some don’t deem it worthy to call a local building department and check.
Others are fully aware but believe that they or their chosen contractor know what they’re doing. Whether due to owners’ negligence or intentional failure to obtain a permit, many houses in the market have minor or major forms of unpermitted work.
What are your options when you want to sell a house with unpermitted work?
As always, there are different options a homeowner can choose from, although in this situation, some have more cons than pros.
Sell as-is through a real estate agent
Selling your home regularly through a local real estate agent is a good option if you are prepared to wait for the buyer willing to invest in a house with unpermitted work. Most buyers avoid fixer-uppers, especially homes with missing or incomplete paperwork. After all, if one thing is not done properly, who knows what else is amiss with the house?
And while you may be happy to wait for the right buyer, you may still not receive the anticipated price. Although sellers expect a discount, the offer they eventually get for a home without permits is usually even lower. When you add to it the real estate agent’s fee and closing expenses, the cost-effectiveness of the option is in question.
Bear in mind that you should, under no circumstances, neglect to disclose unpermitted work. Hiding the fact from the real estate agent, buyer, or both may sooner or later lead to a lawsuit. One that you will most certainly lose.
Sell as-is to a professional home buyer
The best and fastest option, when compared to others, is to sell a house with unpermitted work in current condition to a professional home buyer. The price will be lower, true, as they would need to solve all the issues with the property before being able to capitalize on it. The price usually depends on factors such as the location of the home, its current state, local market conditions, and the amount of unpermitted work.
However, a seller can count on a quick sale and cash payment. Moreover, as there aren’t real estate agents involved, there won’t be any agent fees. Also, closing costs are quite often at the expense of the buyer.
Is lifting a tremendous burden off your back worth selling at a discount? It’s a question all sellers in this situation need to answer for themselves. And they most often say yes.
Remove unpermitted work
Removing unpermitted work is also a good option if the scope of work is not extensive. Perhaps you have installed a large fence, built a shed in your yard, or enlarged openings for your doors or windows. As long as it is easier and less costly to remove the construction, you should do it.
However, that is not always the case. Plumbing and electrical work, adding or removing walls, building a deck or a pool, room conversion, or adding a new floor in a house are all construction works that cost a lot to perform and will cost additional time, effort, and money to remove.
If you opt for this solution, think in advance about your belongings. Hiring local movers to take your items to storage is a safe, cost-effective, and time-saving option. And those are just a couple of reasons why you should enlist professional help. If you let them handle everything, there will be one less thing to worry about while the work is underway.
Obtain permits retroactively
Eventually, there is an option to obtain those missing permits, albeit later and at a cost. Yes, there will be penalties, and there will be more waiting, but this doesn’t necessarily have to be a bad choice.
Selling your home with all permits in order will make your sale more lucrative. While no one but an experienced local real estate broker can estimate an optimal listing price, you will at least have the satisfaction to get as much as your home is worth.
However, note that obtaining a permit after ignoring the city regulations for so long may not be the most pleasant process. Authorities are unlikely to look favorably upon your case unless you fix the previous owner’s neglect. In the latter case, you will avoid paying the penalties and receive sufficient time to make improvements that meet building codes.
Analyze your choices before you decide
If you opt to sell a house with unpermitted work, prepare yourself to sacrifice some of your time, money, or both. Hence, exploring your options in detail will help you make an educated decision and resolve the issue as painlessly as possible.