REO has room additions without permits

[Vince M.]

I came across and REO that looks like a good prospect to wholesale but it has 2 room additions that were built without permits. I spoke to the city engineering department and they said they would need to have plans submitted and then they would inspect the property. If everything checked out they would just require the permits to be paid for. I asked if there were any fines involved and they said no, just the cost of the permits. The rest of the property seems to be in good shape so the only "rehab" expenses aside from a fresh coat of paint would be to have the plans drawn up and the inspection and permits. When I make my offer should it be based on comps of houses in the area the size of this one without the room additions since technically it's a 1 bedroom and not yet a 3 bedroom? The bank has a price of $214,000 which is in the ballpark of houses in the neighborhood with 3 bedrooms but high for a single bedroom house which is closer to $159,000 according to comps I've pulled up. The listing agent said the bank is ready to deal. My offer would be based on the work and cost of permits subtracted from what the property is currently worth as a 1 bedroom.

[Jesse Ramirez]

Our offers are always based on square footage that has has permits pulled.
There is no guarantee that the inspector's will give a thumbs up. They may even ask that the added structure be removed which will give you additional costs.