Thursday, November 13, 2008
Readers Respond to "No Permit" Issue
Dear Sue,
Thank you for your article on buying a house that was remodeled without going through the building permit process. I had another question about it. How would the insurance company handle a loss on an un-permitted home? If an insurance claim was made, wouldn’t coverage be denied on the un-permitted portion? Couldn’t an insurance company deny a claim due to lack of disclosure?
Curious Cal
Dear Cal,
I received several e-mails from readers asking the same question. I asked the insurance experts. One insurance representative was not positive but thought that if one paid insurance to cover a loss that it should be covered. She also pointed out that many of the older historic homes in Auburns downtown area didn’t even have permits. The homes were built before permits were required.
A second insurance representative was certain that the insured property would be covered. She suggested that the insured read their policy very carefully just to make sure that there are no exclusions pertaining to permits.
Dear Sue,
I currently have my home in escrow. I purchased it over ten years ago. It was advertised as 2300 square feet. It appraised and I completed the purchase. The seller didn’t disclose that a room conversion was un-permitted.
My new buyer did a permit check with the building department. The “converted” space was originally permitted for storage not living space. My agent stepped in and advised me to go to the building department and ask them what I needed to do to get it permitted.
I had licensed contractors inspect and certify the converted space. Some modifications needed to be made to the tune of $2000.00. I paid approximately $300.00 for the permit and around $1800.00 for the school fees. It cost me less than 1% of my sale price. I now have a permit and my sale is due to close in two weeks!
Sign me Happy Hank!
Lack of a permit can be due to a homeowner’s ignorance or that fact that a permit was not required at the time of the construction.
Some homeowners don’t think that permits are required for certain changes or alterations while others knowingly neglect to disclose that they made changes without permits. A subsequent buyer wouldn’t know one way or the other unless the alterations were obvious i.e. low ceilings or exposed wiring. One can’t disclose what one doesn’t know.
A prudent buyer will do independent investigations prior to completing a home purchase including doing a permit search at the local building department.
If there are permit issues, check with the building department and make the corrections if necessary. It is a matter of good Home $$s and Sense.
Thank you for your article on buying a house that was remodeled without going through the building permit process. I had another question about it. How would the insurance company handle a loss on an un-permitted home? If an insurance claim was made, wouldn’t coverage be denied on the un-permitted portion? Couldn’t an insurance company deny a claim due to lack of disclosure?
Curious Cal
Dear Cal,
I received several e-mails from readers asking the same question. I asked the insurance experts. One insurance representative was not positive but thought that if one paid insurance to cover a loss that it should be covered. She also pointed out that many of the older historic homes in Auburns downtown area didn’t even have permits. The homes were built before permits were required.
A second insurance representative was certain that the insured property would be covered. She suggested that the insured read their policy very carefully just to make sure that there are no exclusions pertaining to permits.
Dear Sue,
I currently have my home in escrow. I purchased it over ten years ago. It was advertised as 2300 square feet. It appraised and I completed the purchase. The seller didn’t disclose that a room conversion was un-permitted.
My new buyer did a permit check with the building department. The “converted” space was originally permitted for storage not living space. My agent stepped in and advised me to go to the building department and ask them what I needed to do to get it permitted.
I had licensed contractors inspect and certify the converted space. Some modifications needed to be made to the tune of $2000.00. I paid approximately $300.00 for the permit and around $1800.00 for the school fees. It cost me less than 1% of my sale price. I now have a permit and my sale is due to close in two weeks!
Sign me Happy Hank!
Lack of a permit can be due to a homeowner’s ignorance or that fact that a permit was not required at the time of the construction.
Some homeowners don’t think that permits are required for certain changes or alterations while others knowingly neglect to disclose that they made changes without permits. A subsequent buyer wouldn’t know one way or the other unless the alterations were obvious i.e. low ceilings or exposed wiring. One can’t disclose what one doesn’t know.
A prudent buyer will do independent investigations prior to completing a home purchase including doing a permit search at the local building department.
If there are permit issues, check with the building department and make the corrections if necessary. It is a matter of good Home $$s and Sense.
Wednesday, November 5, 2008
Buyer Concerned about Permits
Dear Sue,
My wife and I are in the process of buying the home of our dreams. It is everything that we have been looking for. I think that we are getting a very good price on it. There is only one issue.
The seller said that they built the master bathroom to code but didn’t get a building permit because he didn’t want the property taxes to go up any higher than they already were. He told our agent that he wasn’t prepared to get it permitted and that we had to take it or leave it.
My agent thinks that since we are getting it for such a good price that we should just buy it anyway and permit it later. My wife thinks that if it’s not permitted we could have a problem selling it in the future. We are also worried about being penalized by the county.
We really love this home but we don’t want to buy it at any cost. What are your thoughts?
Worried Walt,
Dear Walt,
Some people when buying a home are very concerned about permits while others are not. There are many properties in Placer County that have been added onto or remodeled without having gone through the permit process. What I am hearing is that you are worried about a future buyer.
If you choose to buy the property and re-sell it, you will be faced with the same two options. You can permit it in order to sell it, or insist that the new buyer buy it “as is.”
Before you make a decision, I think it’s important that you know the extent of what you are getting into. You can determine the scope and cost of the work before closing escrow. This information will help you decide if you want to take it on.
My suggestion would be to have a licensed plumber such as Jeffco, determine before hand whether or not the bathroom can be permitted and how much it will cost. The plumber will look at the spacing of the toilet to make sure that it is to code. The shower will be checked for size as well. And all of the fixtures will need to be properly vented. These are only a few of the items that will need to be considered.
If square footage was added, it will be important to check the setback requirements. If the bathroom encroaches on the setback, it may be necessary to get a variance.
While many counties are fining, Placer County has not been fining people for preemptive work. Keep in mind that this may change in the future.
Today a permit for the added bathroom shouldn’t be over $400.00 plus the cost of any
changes that may be required in order to obtain the permit.
Knowing what you have your hands on before you close escrow is a matter of Good Home $$s and Sense.
My wife and I are in the process of buying the home of our dreams. It is everything that we have been looking for. I think that we are getting a very good price on it. There is only one issue.
The seller said that they built the master bathroom to code but didn’t get a building permit because he didn’t want the property taxes to go up any higher than they already were. He told our agent that he wasn’t prepared to get it permitted and that we had to take it or leave it.
My agent thinks that since we are getting it for such a good price that we should just buy it anyway and permit it later. My wife thinks that if it’s not permitted we could have a problem selling it in the future. We are also worried about being penalized by the county.
We really love this home but we don’t want to buy it at any cost. What are your thoughts?
Worried Walt,
Dear Walt,
Some people when buying a home are very concerned about permits while others are not. There are many properties in Placer County that have been added onto or remodeled without having gone through the permit process. What I am hearing is that you are worried about a future buyer.
If you choose to buy the property and re-sell it, you will be faced with the same two options. You can permit it in order to sell it, or insist that the new buyer buy it “as is.”
Before you make a decision, I think it’s important that you know the extent of what you are getting into. You can determine the scope and cost of the work before closing escrow. This information will help you decide if you want to take it on.
My suggestion would be to have a licensed plumber such as Jeffco, determine before hand whether or not the bathroom can be permitted and how much it will cost. The plumber will look at the spacing of the toilet to make sure that it is to code. The shower will be checked for size as well. And all of the fixtures will need to be properly vented. These are only a few of the items that will need to be considered.
If square footage was added, it will be important to check the setback requirements. If the bathroom encroaches on the setback, it may be necessary to get a variance.
While many counties are fining, Placer County has not been fining people for preemptive work. Keep in mind that this may change in the future.
Today a permit for the added bathroom shouldn’t be over $400.00 plus the cost of any
changes that may be required in order to obtain the permit.
Knowing what you have your hands on before you close escrow is a matter of Good Home $$s and Sense.
Monday, November 3, 2008
Are Buyers Losing Their Advantage?
Dear Sue
I have been looking for a home for about a year. The other night, my uncle suggested that I put my property search on hold. He said that there are too many things happening in the market right now to know which way it is headed. He said if it is going up, I can simply jump in, but if it is going down, I can wait.
Based on Auburn market conditions what are your thoughts? Should I put my search on hold?
Wondering Walt
Dear Walt
In order to have the most objective response to your question possible, I asked a trusted colleague. Jared Michael, a local appraiser at First Appraisal, makes it his business to study and analyze market conditions.
He had a very interesting viewpoint regarding the Auburn market.
“The Auburn market is starting to see prices flatten out. Prices are not declining at the rate we were experiencing over all of 2007 and the first part of 2008. I have even seen a slight increase in the $450,000 and up range,” Jared explained.
He continued, “If you look at the new listings compared to sales, you are seeing a narrowing of the gap.”
Over 2007 we saw four new listings for each sale. We are now seeing two and a half to three new listings to every sale.
From May to July of 07 we saw ninety new listings per month. We are now seeing an average of fifty five new listings per month. These numbers indicate that the buyer’s advantage is shrinking. We are trending towards a better balance between a buyer’s and seller’s market.
I have seen this, Jared explained, a couple of times during the last two years.
I call it a market pause.
While the market appears to be trying to get back to a healthy balance, the various outside governmental and banking influences are creating a lot of uncertainty.
Jared believes that there are huge forces in the market at work that don’t include buyers and sellers coming to an agreement and completing a transaction. The many influences do not have balanced markets as their primary agenda. If it was a clear playing field of normal commerce taking place, I would say the stage is set for market improvement.
Jared echoes Leslie Appleton-Young, the chief economist for the California Association of Realtors. She said that the Sacramento region was one of the first real estate markets to falter and one of the first markets to recover.
Jared said that the best buys can be had at the lower end of the market. They make great investment properties. He also said that it is the best time to buy if your goal is to own and not flip
Buying now can be a matter of good Home $$s and Sense.
I have been looking for a home for about a year. The other night, my uncle suggested that I put my property search on hold. He said that there are too many things happening in the market right now to know which way it is headed. He said if it is going up, I can simply jump in, but if it is going down, I can wait.
Based on Auburn market conditions what are your thoughts? Should I put my search on hold?
Wondering Walt
Dear Walt
In order to have the most objective response to your question possible, I asked a trusted colleague. Jared Michael, a local appraiser at First Appraisal, makes it his business to study and analyze market conditions.
He had a very interesting viewpoint regarding the Auburn market.
“The Auburn market is starting to see prices flatten out. Prices are not declining at the rate we were experiencing over all of 2007 and the first part of 2008. I have even seen a slight increase in the $450,000 and up range,” Jared explained.
He continued, “If you look at the new listings compared to sales, you are seeing a narrowing of the gap.”
Over 2007 we saw four new listings for each sale. We are now seeing two and a half to three new listings to every sale.
From May to July of 07 we saw ninety new listings per month. We are now seeing an average of fifty five new listings per month. These numbers indicate that the buyer’s advantage is shrinking. We are trending towards a better balance between a buyer’s and seller’s market.
I have seen this, Jared explained, a couple of times during the last two years.
I call it a market pause.
While the market appears to be trying to get back to a healthy balance, the various outside governmental and banking influences are creating a lot of uncertainty.
Jared believes that there are huge forces in the market at work that don’t include buyers and sellers coming to an agreement and completing a transaction. The many influences do not have balanced markets as their primary agenda. If it was a clear playing field of normal commerce taking place, I would say the stage is set for market improvement.
Jared echoes Leslie Appleton-Young, the chief economist for the California Association of Realtors. She said that the Sacramento region was one of the first real estate markets to falter and one of the first markets to recover.
Jared said that the best buys can be had at the lower end of the market. They make great investment properties. He also said that it is the best time to buy if your goal is to own and not flip
Buying now can be a matter of good Home $$s and Sense.
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