According to Investopedia, municipalities often charge 1% of the total construction cost for a home improvement permit. Inspections can take up to six weeks.
Because of time and cost concerns, many homeowners skip the permit process. While this might seem like a quick fix, it can lead to trouble down the road. Selling a house with unpermitted work can be difficult.
Buyers may have concerns about safety, legality, or unexpected future expenses. Sellers can also make mistakes that lead to delays or legal problems.
Keep reading to learn about the common pitfalls of selling a home with non-permitted improvements and how to avoid them.
Failing to Disclose Unpermitted Work
When selling a home, you might worry that revealing unpermitted renovations will scare buyers away. Maybe the work was done years ago, and you’ve forgotten about it.
However, not disclosing unpermitted work is not just a mistake – it’s a violation of property disclosure rules. Failing to be upfront about these renovations can cause serious issues that may derail the sale. Here’s what could happen if you don’t disclose unapproved renovations:
- Lawsuits from buyers for failure to disclose
- The sale falling through due to buyer hesitation
- Demands for price reductions or repairs
- Legal action for misrepresenting the property condition
- Problems with the closing process
Being transparent about unpermitted work keeps you legally safe and builds trust with buyers. This helps them make informed decisions, ensuring a smoother, more successful sale.
Not Considering Selling As-Is
Selling a home with unpermitted work can be challenging when using traditional methods. Most potential buyers might hesitate to buy a house that doesn’t meet building codes. They may worry about safety issues, legal problems, or unexpected costs for bringing the house up to code.
If you hire a realtor, they may suggest getting retroactive permits. However, the process can be costly and time-consuming.
Even after obtaining the permits, there’s no guarantee you’ll sell the house quickly. Because of this, you should consider selling the house as-is. This approach can offer many benefits.
Saves Time and Money
Selling as-is allows you to avoid the long, expensive process of securing permits. There’s no need to hire contractors to fix or update non-permitted improvements. This can save you money and prevent delays in the home sale process.
Avoid Paying Realtor’s Commission
Selling to cash buyers can eliminate the need to involve a realtor. Without a realtor, you save on commission fees, usually a percentage of the sale price. This is a significant benefit for you as a seller because it increases the amount you’ll walk away with after the sale.
Attracts Cash Buyers
Many cash buyers are open to purchasing properties as-is. They can handle the necessary repairs. This can speed up the sale and make the process easier.
Neglecting to Get Legal Advice
Whenever you face a major financial decision, consulting an attorney is essential. Failing to seek legal advice when selling a property with unpermitted work can be risky. You need a lawyer to understand the critical aspects of the process.
Potential Liabilities
An attorney can help identify legal risks linked to non-permitted home improvements. They explain how buyers might take legal action if you fail to disclose problems. This enables you to prepare for any disputes and avoid lawsuits.
Your Responsibilities as the Seller
A lawyer clarifies your obligations under the property disclosure rules. They can guide you on what information to provide to buyers. This will protect you from claims of dishonesty later in the sale process.
House Title Transfer Process
Lawyers ensure that the title transfer complies with state and local laws. They check for outstanding issues related to unpermitted work. This can prevent delays or complications when finalizing the sale.
Ignoring the Impact on Financing
Many people use mortgages to acquire homes. However, getting financing for houses with unpermitted work can be challenging. Lenders are less likely to offer loans for these properties because:
- Unpermitted work may violate building codes
- The house may be considered unsafe or uninhabitable
- Lenders can’t guarantee the home’s value
- Unpermitted renovations may create insurance problems
This can be frustrating, especially if you’ve already agreed on a sale. The deal could fall apart at the last minute due to financing issues. To avoid this, it’s essential to be upfront about the non-permitted home improvements.
If a buyer needs financing, work with them to explore other options. Being flexible and transparent can prevent financing issues from derailing the sale.
Failing to Keep Proper Documentation
Proper documentation is key when selling a house with non-permitted improvements. Detailed records of all work done can ease buyer concerns.
They can also protect you if legal or appraisal issues arise. Buyers want proof that the work was done safely and professionally. Ensure you have documents such as:
- Receipts
- Invoices
- Contracts
- Contractor licenses
- Warranties
- Building plans
- Correspondence with professionals
- Inspection reports
These records show buyers that you’ve kept things transparent. Even without permits, they demonstrate that qualified professionals completed the work. They also provide evidence of the materials used and the scope of the improvements.
Keep these records organized and ready to share. It shows you’re prepared and builds trust with potential buyers. This small step can make a big difference in closing the deal.
Overpricing the Property
As a home seller, it’s understandable that you want to sell your property for the highest possible price. You may hope to recoup the money you spent on home improvements. However, this can be challenging if the renovations don’t have proper permits.
Unpermitted work may not add the value you hoped for. It could reduce the value of your home due to the risks and challenges buyers face.
Overpricing your home can make it sit on the market longer, which can lead to frustration. Buyers are often hesitant to pay full price for houses with non-permitted improvements. To avoid this, you need to be flexible with your asking price.
Start by researching the fair market value of your home. Consider recent sales of similar houses in your area. You can price your home slightly below market value to attract buyers quickly.
Pricing it fairly helps quicken the selling process. A realistic price ensures a smoother home sale process.
Assuming Buyers Won’t Care About Unpermitted Work
As a seller, you might think buyers only care if the house looks great. You may invest in DIY improvements or add modern furnishings and appliances to attract interest. However, these efforts may not matter if the renovations lack proper permits.
Many buyers care about permits because they see them as a quality guarantee. Permits assure buyers that the work meets safety standards and legal requirements. Without a permit, buyers may worry about:
- Poor craftsmanship
- Hidden structural problems
- Safety hazards
- Future fines from local authorities
- Costly repairs to fix issues
- Challenges with insurance coverage
To address these concerns, you can involve a home inspector. An inspector will verify the quality of the work, even without permits. This reassures buyers about the safety and durability of the improvements.
Although hiring an inspector adds to your expenses, it can build trust with potential buyers. This helps them look past the unpermitted work impact and feel confident in their purchase.
Not Offering Buyer Incentives
Selling a property with unpermitted work often requires extra effort. You need to offer potential buyers incentives to persuade them to close the deal. Consider:
- Paying for closing costs
- Offering a price reduction
- Providing a home warranty
- Covering part of repairs
- Offering flexible move-in dates
- Paying for a property inspection
- Pre-paid utilities
- Offering a rent-to-own arrangement
- Professional cleaning or landscaping
Some incentives don’t have to be costly. For example, a flexible move-in date can make your property more attractive without breaking the bank.
Simple gestures show buyers that you are willing to work with them. This can help build trust and encourage a quicker sale.
Underestimating the Impact on Appraisals
Appraisal is a key part of the home sale process. It determines your property’s market value.
Many sellers hope their renovations will increase the property’s value. However, unpermitted work often brings unexpected challenges.
Appraisers assess more than just the appearance of the house. They view non-permitted property renovations as a risk.
This can include safety concerns or non-compliance with building codes. As a result, the appraised value may be lower than expected.
This can be frustrating if you expect renovations to add significant value. Unpermitted work can reduce the home’s appeal in the appraiser’s eyes. This may leave you feeling disappointed during the appraisal process.
To prepare, research how unpermitted renovations might affect your home’s value. Speak with experienced real estate professionals for guidance. Be upfront with the appraiser about any unpermitted work.
Setting realistic expectations can help you avoid surprises. Knowing the potential outcomes allows you to plan your next steps confidently. Proper preparation ensures you’re ready for the real estate challenges ahead.
Not Budgeting for Potential Repairs
Selling a home with unpermitted work often requires extra repairs or updates. These are necessary to bring the property up to code.
The sale process may stall if you don’t budget for these costs. Buyers may insist on repairs before closing the deal. These repairs may include:
- Obtaining the necessary permits
- Fixing safety issues
- Addressing code violations
- Replacing substandard materials
- Upgrading faulty electrical systems
- Repairing plumbing issues
- Correcting structural problems.
Before listing your house, create a budget for any required repairs. Assess the costs carefully to avoid surprises.
If funds are tight, explore financing options. You can:
- Take home equity loan
- Borrow from family or friends
- Seek a personal loan
- Negotiate repair costs with contractors
Consider the pros and cons of each option to decide which one to consider. Ideally, pick an option with a low financing acquisition cost.
Not Considering the Time Needed for Permits
When listing a home with non-permitted improvements, consider getting retroactive permits. Some buyers may require them before finalizing the sale.
Failing to anticipate how long it will take can lead to delays. You may underestimate the time needed to get the permits, causing frustration with potential buyers.
It’s important to consult real estate professionals before proceeding. They can advise you on the permitting process and how long it typically takes in your area. The timeline may vary based on location and the extent of the improvements.
It’s essential you ask about ways to speed up the process. Some local agencies may offer options to fast-track applications, but this may come with additional costs. Be prepared for possible delays if there are complications with the non-permitted work.
Adjust your expectations and timeline to account for potential permitting delays. If you plan to sell quickly, factor in extra time to obtain permits.
Not Being Transparent About Costs
As a home seller, it’s understandable to want to minimize your expenses. You may hesitate to mention the costs of retroactive permits or repairs related to non-permitted improvements. Sometimes, you may fear that bringing up these costs will either increase your expenses or allow the buyer to negotiate a lower price.
However, failing to discuss these costs is a mistake. Buyers may feel misled if they discover these expenses later on.
This can harm the trust between you and the buyer, potentially derailing the sale. Being upfront about the costs creates transparency and fosters a stronger relationship with the buyer.
Discussing the costs early on helps set realistic expectations for both parties. It shows you are honest and willing to work with the buyer.
By being transparent, you can prevent misunderstandings and ensure a smoother transaction. Ultimately, honesty will help you avoid issues during the process and make the sale more successful.
Selling a House with Unpermitted Work: A Smarter Approach
Selling a house with unpermitted work may be tricky, but transparency and planning can make it easier. Understanding the potential challenges, like appraisal issues and extra repairs, can help you avoid surprises. If you want to sell your home quickly, consider working with professionals to navigate the process.
At First Choice Home Buyers, we purchase homes in Dauphin (Harrisburg), York, Cumberland, Lebanon, Adams, Franklin, and Lancaster Counties for CASH, regardless of condition. With over 20 years of experience, we’ll buy your home as-is, including any non-permitted improvements.
Contact us today for a quick and easy sale!
