Non-permitted Addition in California

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Non-permitted Addition in California

Logan Vierstra
Investor · Sioux Falls, SD · Member since 2016 · 72 posts · 20 votes

I got a friend trying to sell a house in El Dorado county that he has built a rather large addition onto. He has none of the addition permitted. Hes told me that when he bought it, it was roughly 1000 sq ft, and that he's added about 1400. When I've researched the property it says that it's 1800 square feet on Realtor and property radar, and 2400 on Zillow. So I figure in reality he has somewhere between 600-1400 sq ft non-permitted addition. It's still a long way from finished, but his plan is to keep working on it till he gets it nice enough to sell to a cash buyer that doesn't care about it being permitted. I told him I believe he's hoping to find a unicorn. He's under the impression that he can get 400-450k on it considering that comps to his property are selling in the 600-700 range(2400 sq ft permitted, and in ARV condition). Comps on his property ,assuming that 1600 sq ft are permitted, are falling closer to the 400 range. I think he's more likely to get 250 for it.

My questions are:

  • Can he even sell the property without tearing down the addition?
  • if so, what could he realistically expect to get?
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  • Sean OToole
    Investor · Truckee, CA · Member since 2013 · 546 posts · 445 votes
    7y

    I've probably purchased and sold a dozen houses with un-permitted additions over the years. All of the sales have been with full disclosure. Not so with the purchases, but that is part of buying trustee sales.

    You were quite savvy to note the difference between public records and the listed, or owner claimed, sq ft. That is certainly the best tell tail sign of un-permitted work. One of my check list items before buying at trustee sale is to compare past listings (if any) to public records to look for exactly that.

    Regardless he can definitely sell it, and should absolutely disclose it so that he doesn't have to worry about future liability.

    As for how it will impact value, it really comes down to the quality of the work, and the value it adds to the property. If it was all done to code there's even the possibility of getting it permitted after the fact. If the work is really shoddy, it may be best to tear it down.

    I've had properties with un-permitted work that have sold at or above market, especially if the un-permitted work was unique, added real value to the home, and wouldn't be approved otherwise (un-permitted space converted into a cool loft or wine room for example). And I've had ones that I've sold at deep discounts because the only fix was to tear it down and decided to wholesale it instead.

    Hope that helps.

    3Reply
  • Logan Vierstra
    OP
    Investor · Sioux Falls, SD · Member since 2016 · 72 posts · 20 votes
    7y

    Thank you Sean for taking the time to reply! 

    I definitely wouldn't say his work is shoddy, his work looks very clean to the untrained eye, but he is a DIY guy, and my fear is that a lot of his work while probably structurally safe most likely won't be up to the fine details involved in code. I have some limited experience working with my father in carpentry and dealing with inspectors, and I feel that if a nit-picky one came to his house, it might open up a can of worms. That's also his concern at this point, that if he does bring in an inspector they might tell him to tear it down before he can sell it. 

    What I'm trying to accomplish is to find out whether or not he is just digging himself deeper into a hole. 

    • What risk would he be taking if he brought in a code inspector?
      • Can they force him to tear down?
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  • Anthony Katsonis
    Realtor and Investor · Placerville, CA · Member since 2013 · 130 posts · 59 votes
    7y

    @Logan Vierstra

    I concur with Sean. Good info there, I have had similar experiences in El Dorado County. One example: I bought a property that is on record as being 1000 square ft. I measured it at 1500 square ft. Turns out the sellers converted the garage. No big deal to me, they did good work and I figure I could always have the county do an as-built-permit to legitimize the square footage and (in theory) raise my property value for resale. I will probably wait to do that til right before I sell, if I ever do, as that would raise my property taxes, which obviously doesn't help my cashflow situation.

    My best advice is to have your friend talk to a contractor and see what their opinion is of the situation and what an As-Built-Permit would entail. He should also go to the county, be vague (don't give address or full name or anything, call me paranoid if you want) and ask what they would require for an as built permit. My understanding is that their main concern is that there is no health or safety issues... i.e. GFCI outlets where needed, tempered glass where needed, smoke detectors, etc.  If he does do this please update us on his findings, as I've meant to go to the county to ask for myself but I've been so dang busy I can't seem to find the time.

    Hope this helps, and good luck. Feel free to reach out to me directly if you have any other questions about EDC REI. :)

    3Reply
  • Logan Vierstra
    OP
    Investor · Sioux Falls, SD · Member since 2016 · 72 posts · 20 votes
    7y

    Thank you Anthony. I will definitely take these recommendations to him and go from there. 

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