How to determine when additions are worth it? San Diego, CA

Question

I own a home in an area San Diego, CA where process are starting to increase. My home currently is valued 365,000. Others in immediate area on same street or 1 street away are valued at 400 or more. My home has been remolded with new roof, 4 bedroom 2 bath, built 1976, 1600sq ft. my home has the same type of home improvements as the others that are higher. I also am on a corner lot. My has an unofficial addition added 20 years ago.  I can do some curve appeal but that will not boost my value that much. How to determine how to get my value up to par. Should I try to permit the addition now, the laws probably were different 20 years ago?

Matt R. · Answer

If you are looking to sell it, in San Diego there will be plenty of buyers willing to work with unpermitted additions. At this price point I would not try to open any can of worms regarding retro active construction and trying to officially permit.

thanks,

Matt

thanks,

Matt

Mike G. · Answer

Talking to a realtor and a mortgage broker in your area about any issues with it is a good idea.  I don't know about there, but here we can list a house and specify the approximate total square footage as estimated.  That's another good question for the realtor.  For me, it's not worth getting these additions permitted.  What happens if the inspector comes in and finds out it's not up to code and you have to tear it down?  Was that worth it?  But maybe your market is different - here, people buy houses with unpermitted additions all the time, as long as they were built well.

Madison Lowe · Answer

Thanks, everyone for the information and feedback, much appreciated. We've owned this home for 30 years. The addition is a family room that is unpermitted and it's great. It does not have any plumbing or electrical concerns. I'm considering talking to a realtor first.  My thinking on this is the homes does not show its true square footage which equals lower value. I could be wrong? I was considering if its was worth getting it permitted? I'm doing a little more homework.

Thanks Again

Mike G. · Answer

This is not necessarily correct.  We've sold a couple of houses with unpermitted additions to financed buyers with no problems (both were FHA loans).  The quality of the work was considered acceptable so the loan was not an issue.

Peter Chan · Answer

What matters if whether a permit was necessary when you originally built the addition. If I were to take a guess, a permit was necessary.

If you try to sell the property with an un-permitted addition, no "public" lenders will touch that with a 10-foot-stick. This does not affect you directly as the current owner, but it does affect the buyer because they will not be able to get a loan from a bank. This will reduce your potential buyer pool to cash buyers and private-money loans.

I would recommend you at least look into getting the addition permitted. This could lead to some work to bring it up to the current building standards. Once you do this research, you can at least have a number to build into your calculations.

In the meantime, @Matt Rosas is correct: there are numerous Investors/Cash Buyers interested in San Diego properties who might take this property off your hands without traditional financing.

Keep in mind that Investors and Cash Buyers are typically more-savvy than your average buyer, and they need to make the numbers work for them, so your sale price may be lower than what you could have landed in the open market... e.g. expect to leave some money on the table.

Colleen F. · Answer

Same square footage , number of rooms etc?  or  one less room because its not legal 4 bedroom?  if its not a  legal room  making it legal may be the only way to get it to be included in your value,  My sister bought a 3 bedroom house like this, it had  4 bedrooms but not legal since the septic was not for 4 bedrooms.  If you can't include a room in the appraisal then the best way to increase value is to make the room legal and include it.

How to determine when additions are worth it? San Diego, CA

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