Taking over a flip that didn't have permits pulled.

[Aaron Holowaychuk]

A local investor is looking to offload a property that has had work done without permits being pulled by the contractor.  The extent of the work is structural, plumbing, electrical, and HVAC that I am aware of.   Most of it is rough work, but I haven't seen what's visible and what is behind drywall.  Investor thinks a new buyer can get a better response from the city  simply by "trying to be straight" with them.  Not sure if I buy this argument.

The ARV is conservatively $200k. Asking is $110k and repairs are about $40k. That makes about a 75% deal. My thought would be to take off 5% ($10k) of the ARV to get the deal to 70% ($140k). I would also like to drop another 5% of ARV to account for risk to get the all in cost to 65% ($130k).

Taking over unpermitted work is not something I have come across.  Can anyone share a similar example and how it worked out for them?