There are many properties in the Bay Area that have had some sort of modification without approval and permits by the city. In many cases, mostly upgrades, these modifications are undetectable as in a remodeled bathroom without changes to the overall footprint. Other additions such as an enclosed patio or changes to bedroom or bathroom count are detectable and noticed by the appraiser when verifying the property against county records. These modifications do not automatically exclude a property from being eligible for financing but there are a few important notes that the appraiser needs to address to remain compliant:
1. The appraiser must acknowledge the Non-Permitted construction and specifically comment on four things:
a.That there are no Health & Safety issues.
b.That the work was performed/completed in a workman like manner.
c.The appraiser must measure and comment on the quality of the work and what impact, if any, it may have on the marketability of the subject (Best case is ZERO impact).
d.The appraiser must also estimate a cost to return the home to its previous, permitted state and if extensive, include in his opinion of value.
2. If it is your listing, be mindful of the notes you put on the MLS regarding any non-permitted work as the appraiser will have access these comments, especially if they are too specific in nature.
As you preview properties with these types of additions, it is extremely helpful to have us preview the MLS in advance to advise prior to writing your offer. In times past, Non-Permitted additions were extremely taboo and many lenders did not lend on these properties. Period. We are happy to report, that those times are in the past and we can now move these homes.