Refinancing a house after renovation but no permits.

[Paul Shepherd]

Hi All! Looking to tap into the wisdom and guidance of this tremendous community.

My wife and I have a small rental house that we are moving into and have already sold our house we were living in. We decided to do some renovations to the place prior to moving in. We have a limited timeframe so we started digging into some demo and framing and have decided we would like to add a second bathroom. We originally weren’t going to get permits for the work, but now we’re thinking we should.

My question really is if we don’t pull permits and move forward with completing the renovations, are we going to be screwed when we try to refinance the house if that second bathroom isn’t permitted? Or, will the appraiser and lender just see a renovated two bed and two bath and appraise/lend accordingly? The county auditor’s site will still say 2 bed 1 bath instead of 2 bath. Also will we be sorry when we go to sell?

Is there a way to get the auditor’s site updated to reflect the 2 baths without it being permitted?

We aren’t adding to the structure, just changing some things within the existing structure.

I know pulling the permits is best practice, but with Covid, I’ve heard it’s very slow going through that process and that’s time we felt we didn’t have.

Thank you in advance for your guidance!

[Jake Roland]

@Paul Shepherd I'm sure it depends on your area, but in my experience no appraiser or buyer has ever asked to see permits for anything. Or gone to the courthouse to check if something was permitted. If you are adding on sqft it may raise a flag to someone, but just changing within the current structure, and as long as it's done correctly to where an inspector can come in and not find anything drastically wrong with it (toilet too close to the wall, etc) I doubt you would be screwing yourself when you went to sell it. I just did exactly what you're talking about, turned a 3 bed 1 bath into a 3 bed 2 bath within the existing sqft, without permits, it recently appraised for what I expected and counted as a 3/2 and was never asked about permits. That's just my experience though.