Selling a house with unpermitted work? One wrong step your sale explodes.
And while selling is possible, it’s not without its hurdles. Whether you’ve inherited a DIY disaster or skipped some permits yourself, you need straight answers.
We’ll break down your options, from retroactive permits to as-is sales, so you can close the deal without losing out.
Key Summary
- Retroactive permits can legalize existing work, with costs typically ranging from $200-1,500 per project.
- Selling as-is requires full disclosure but attracts investors offering quick, cash-based transactions.
- Working with experienced real estate agents can help navigate disclosures and price negotiations effectively.
- Insurance policies may not cover unpermitted modifications, creating additional financial risk for buyers.
What Is Unpermitted Work?
Unpermitted work is any construction or renovation done on a property without the proper permits from your local building authority.
This includes anything from minor alterations, like installing new windows, to major renovations, such as adding a room or upgrading electrical systems.
Why do homeowners do this? Sometimes, it’s out of convenience or to avoid the hassle of paperwork. Other times, they may not realize a permit is needed or want to avoid the cost.
Whatever the reason, the result is the same: unpermitted work creates challenges when it’s time to sell the property.
Risks of Selling a House with Unpermitted Work
Selling a house without permits isn’t illegal, but it does come with risks.
For starters, buyers and inspectors could flag the unpermitted work, leading to delays, cost negotiations, or even a failed sale.
The risks vary depending on the nature of the work. If an inspector finds unpermitted work during an inspection, it could stop the deal in its tracks.
In some cases, the buyer may be willing to purchase the house as is but they’ll likely demand a price reduction.
In other cases, the buyer could insist that you fix the issues or obtain retroactive permits before moving forward with the sale.
How to Sell a House with Unpermitted Work
Even though selling a house with unpermitted work adds hurdles, it’s not impossible.
Here are some options to consider:
Step 1: Obtain Retroactive Permits
If you want to address the unpermitted work before selling, applying for retroactive permits could be the way to go.
Depending on your jurisdiction, you may be able to “legalize” the work. For example, if you’ve done unpermitted electrical work, you might be able to apply for a permit and have it inspected.
Keep in mind retroactive permits take time and money with costs ranging from $200 to $1,500, depending on the work and your local regulations.
Step 2: Sell As-Is With Full Disclosure
Selling a house as-is is another option. But full transparency about the unpermitted work is essential.
Some buyers are willing to take on the risk but will likely negotiate a lower price. It’s important to weigh the impact this could have on your sale price.
Step 3: Negotiate Price Reductions
Negotiating a price reduction is common when selling a house with unpermitted work. The buyer may insist on getting repairs or permits before they finalize the deal.
Offering a price reduction or credit for repairs can sweeten the deal and keep the process moving forward.
Step 4: Work with Experienced Professionals
Working with real estate agents familiar with selling houses with unpermitted work can make a big difference.
They’ll know the market, how to present your property to potential buyers and how to navigate the legal and financial aspects.
You might also want to consult with an attorney or contractor to ensure you understand the full extent of what’s involved.
How Much Does a Retroactive Permit Cost?
When you apply for a retroactive permit, the cost varies with the price determined by the type of work and your location.
For example:
- A retroactive permit for electrical work could cost anywhere from $300 to $1,000 or more to get inspected and permitted.
- For larger construction projects like room additions, the cost could reach over $1,500, depending on the complexity and size of the work.
Be sure to check with your local building department to get a clear estimate based on your specific situation.
Fines for Unpermitted Work
Fines for unpermitted work also vary depending on your local laws. In some cases, fines may be imposed if the work is discovered and you haven’t applied for a permit.
These fines can range from a few hundred to a few thousand dollars, adding to your selling expenses.
The best strategy is to address unpermitted work upfront to avoid surprises later on. Getting permits for the work done helps mitigate potential fines and ensure your house complies with local building codes.
ℹ️ Pro Tip! Check with your insurance if unpermitted changes are covered. Some insurance policies might not cover damage or liability for work that wasn’t permitted.
Investors or Traditional Buyers?
Selling a home with unpermitted work can leave homeowners wondering which route to take: investors, often willing to pay cash or traditional buyers.
Both options have distinct advantages and drawbacks, depending on what you’re looking for in the sale.
Investors are usually more willing to buy properties “as is,” while traditional buyers may need more reassurance or time to consider the risks.
Selling to Investors Pros
- Fast, often cash-based transactions with quick closings.
- No need to fix the unpermitted work before selling.
- Less negotiation on price since investors expect to take on the risks.
Selling to Investors Cons
- Likely to get a lower offer due to the risks and costs involved.
- Less room for negotiation in terms of price.
Selling to Traditional Buyers Pros
- Potential for a higher sale price compared to investors.
- Buyers might be willing to work with you on repairs or retroactive permits.
- More opportunities for negotiation and creative solutions.
Selling to Traditional Buyers Cons
- Buyers may back out if they discover unpermitted work.
- More time for approvals, inspections, and negotiations.
- Financing could be difficult, as banks often hesitate to approve loans for homes with unpermitted work.
Frequently Asked Questions
Can you sell a house with unpermitted work?
Yes, you can sell a house with unpermitted work, but you must disclose it to potential buyers. Buyers may negotiate for repairs or a lower sale price.
What happens if an inspector finds unpermitted work?
If an inspector finds unpermitted work, the buyer could request that it be fixed, apply for retroactive permits, or negotiate a lower price.
How can I fix unpermitted work?
You can fix unpermitted work by applying for retroactive permits through your local building authority. You may also need to bring the work up to current code standards.
What happens if electrical work is done without a permit?
If electrical work is done without a permit, it can result in fines, failed inspections, safety hazards, and issues when selling the property.
Conclusion
Selling a house with unpermitted work doesn’t have to be a deal-breaker. Whether you choose to fix the work with retroactive permits or sell as-is with full disclosure, you can still close the deal.
Be upfront with buyers, consider price reductions or credits, and consult professionals to navigate the process smoothly.
Need a fast and hassle-free way to sell your home, even with unpermitted work? Speak to us about a quick cash offer and skip the permit headaches.
