Home renovations, additions and repairs often require permits to ensure that the construction or repairs are compliant with local building codes. Getting the work permitted can cost extra money for a variety of reasons. Because of the extra costs, some homeowners will choose to get work done without pulling a permit.
In almost all cases, unpermitted work must follow disclosure laws when the house is listed for sale. This information also needs to be properly disclosed in the listing to ensure that everyone who comes to see the house is aware of the unpermitted work. If you're working with a real estate agent, he or she will craft the language of the listing to make this clear.
Know the Potential Problems
Unpermitted work presents a problem for home buyers for a number of reasons. These problems can make selling a home with unpermitted work more difficult.
Home buyers may have difficulty finding insurance for the house: Many insurance companies will not insure unpermitted work. Home buyers who wish to avoid the hassle of finding homeowners insurance may not make an offer on a home with unpermitted repairs.
Many home buyers will have difficulty securing a mortgage: Certain types of mortgages won't be granted for homes that have unpermitted work.
Unpermitted work can be dangerous: Permits help local building officials control quality. If the work on a home is unpermitted, this could mean that the repairs or additions made to the house are not safe, which can also deter home buyers.
Because of these problems, home buyers who do make an offer will likely offer significantly less for the property.
If you're thinking about selling a house with unpermitted work, there are a few options for moving forward.
Get the work permitted: Getting the work permitted retroactively can be quite expensive. In some cases, the contractor may need to redo the wiring and plumbing, which could involve tearing out walls. In some cases, the work may need to be torn down and done over again. The process for getting an old project permitted will depend on the local permitting requirements.
Sell the house as is: If you choose to sell the house "as is", expect the sale of the house to take longer. Plan to sell the property for a reduced price as well. Work with your real estate agent to write the listing and stage the property to attract the most buyers.
Tear out the work and restore the house to its original state (if possible): In some cases, unpermitted work is easy to tear out. For small changes, returning the house to its original state can be less expensive and less time consuming.
Work with Your Real Estate Agent
If you have a home with unpermitted work, the most important thing you can do is work with your real estate agent to decide how to handle the problem. Whether or not you decide to get the changes permitted, tear down the old work or sell the house as is will depend on the circumstances. Your real estate agent can help you decide what is best for you.