Concerned, Home Seller in Austin, TX

Purchase of home in Austin, TX where additions were made w/out city permits - trouble for buyer?

Asked by Concerned, Austin, TX Fri Jun 10, 2011

We are considering making an offer on a home in Austin, Texas. The homeowner (a contractor) put on an addition w/out getting required permits. What is the ramification to a buyer in this situation? Would buyer need to obtain permits? What are the costs in Austin?

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15
Tomas Corzo, Agent, Austin, TX
Mon Jun 13, 2011
I’ve seen this happen several times with different results. Most of the time, buyers purchase property and don’t suffer any negative consequences from the city. However, it’s a somewhat of a fear/issue future buyers will have with the property. In very few times where the additions had clear and obvious code issues, the city asked the new owners to remove some sheet rock to inspect plumbing, electrical, framing and insulation. The cost is going to be based on the permit and the amount of labor and materials related to the size of the space being inspected and/or redone.
0 votes
Guy Gimenez, Agent, Austin, TX
Sun Jun 12, 2011
Make your offer in consideration of the permitting issue. It may become a problem down the road or it may not. Homes are sold everyday that have non-permitted additions, septics, etc. and nothing ever comes of it. Keep in mind that the City of Austin wants permits for almost anything you do to a home short of putting in new carpet or painting the house. It has less to do with safety or code than it does with the city having control and more of your money.

The reason people don't get permits is not because of the cost of the permits, but instead because of the cost of the continual delays caused by city code inspectors and their changing requirements. I speak from personal experience. I can also tell you that I've bought and sold many homes that should have had work permitted but didn't.and I never had a problem selling those homes even though this material matter was fully disclosed.

Use the "permit" issue during your negotiations. If may give you some additional leverage. If the property is aggressively priced and there is little inventory in that area, the seller will likely sell the home regardless.
Web Reference:  http://www.phgbrokers.com
0 votes
Melissa Webb, Agent, Austin, TX
Sat Jun 11, 2011
If you purchase this home without the seller obtaining the permits, you the new homeowner would be responsible for the permits. If you ever wanted to sell the home again, you would need to obtain the permits and bring the home up to code, if it was not done correctly. Many times, the city will make the new homeowner "redo" much of the new addition or at least open up a few walls to make sure the insulation and electrical was done correctly. Costs are minimal for the permits of an addition, it just depends on the addition. Definitely less than $1000 and usually around $250.

I hope that this helps.

Good luck with your decision.
Melissa
0 votes
Tim Hunke, , 78746
Sat Jun 11, 2011
I agree with Lynn since the addition will show up on the appraisal. Since that would have to be resolved before closing it wiould behove the seller to get it resolved before the house goes on the market.
Good luck.
Tim Hunke
0 votes
Dallas Texas, Agent, Dallas, TN
Sat Jun 11, 2011
I don't believe your lender WOULD allow you to purchase till those issues are resolved. With any construction requires city approval OR seller clears all then close

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
http://www.lynn911.com
0 votes
Doug Vogelsa…, Agent, Austin, TX
Sat Jun 11, 2011
You have received much good advice, the most common (and sage) being 'ask your agent.' If you don't have one, interview a few and hire one as soon as possible.

As Lizz said, one reason for a contractor to not get permits might be to try to save money by taking shortcuts - which will likely lead to more serious problems down the road. If you have not hired an agent to assist you in the home-buying process in an attempt to get a lower purchase price on a house by 'saving' the fees associated with the services of a professional Realtor, I would submit that you are headed down the same road.

Good luck.

Doug Vogelsass
512-739-0457
0 votes
Bill Austin, Agent, Austin, TX
Sat Jun 11, 2011
Concerned,
The homeowner (a contractor) put on an addition w/out getting required permits.
*What is the ramification to a buyer in this situation?
Many to consider. 1) Lender may have issue with this. 2) When you need to sell it will then be an issue for you and the next buyer. 3) Quality of work? 4) Cost to mitigate obtaining permits. 5) Potential repairs need to meet / obtain permits.
Much due diligence is needed here. I can't imagine moving forward without the owner getting his house in order.

Bill
0 votes
Lizz Grimes, Agent, Austin, TX
Sat Jun 11, 2011
There are many problems with this situation and if you were my client, I would advise you to dismiss this house and let's find another. This is only a problem for the buyer if you buy the house! A real problem for the seller trying to sell the house! I had just such a listing and more than one buyer walked away due to the lack of permits. This lack of permitting creates problems on many levels. A contractor would only do this without permits to save time and money and that means, in my book, things were not done right. Also, if you were to purchase the home, it's possible to have issues with your insurance company providing coverage if there were a problem related to the addition. Find another house. If you need more advice, please contact me and I'll be happy to help out. Lizz Grimes lizzgrimes@kw.com
0 votes
Scott Butcher, , Austin, TX
Fri Jun 10, 2011
If you were to purchase, then you would be buying "as is, where is" and thus any problems that arise after your purchase would be your responsiblity to fix.

You will never know for certain if the construction (even if the Seller is a GC) were performed correctly unless you did major deconstruction and hire an inspector to make sure it was done right ($$$$$$). Remember, General Contractors are not licensed in Texas, so anyone can be a General Contractor and some are much better than others....

If your truly concerned, then I'd just look at finding another home that your more comfortable with buying.

Trust your gut instinct on this one.

Best of luck.

Scott Butcher
Mortgage Banker
Maker Capital Group, LLC, an Ameripro Funding Co.
2003 N. Lamar
Austin, TX 78705
512-796-7738
scott@makercapitalaustin.com
0 votes
vivianne dor…, Agent, Austin, TX
Fri Jun 10, 2011
There are so many homes for sale, why buy one where you may have problems? Or, if you really think this is the one, make the offer conditional upon the seller obtaining the permits within a certain number of days.
0 votes
William Frie…, Agent, Austin, TX
Fri Jun 10, 2011
Concerned,

Depends on the addition, type and construction.
Electrical, plumbing and foundation for sure would need permits.
A Building permit request would incorporate all of the trades and note those required.
The building permit would also find if structure was built over easements or into a setback limitation for front, side or rear yard setbacks.

Seller should obtain and pay for all permits to quantify and qualify the construction.
There should be a clear approval or Occupancy Permit issued by the City. If Electrical or Plumbing work is covered up then some destructive investigation inspections may have to be made.

Bill Friedrich
512-517-2961
billfriedrich@remax.net
0 votes
1st Zero-Emi…, , Austin, TX
Fri Jun 10, 2011
Sorry, cell phone typing here. It should have read CAN expect foundation issues.
Call the city of austin permits department. With the dates of addon construction and ask them about any fines or legal issues for that home
0 votes
Phillip Baird, Agent, Austin, TX
Fri Jun 10, 2011
Please ask your agent. If you don't have one, get one. This can be a really tricky situation that could cost you a lot of heart ache, pain and money. Be afraid. Call one of us now!
0 votes
1st Zero-Emi…, , Austin, TX
Fri Jun 10, 2011
When was the add-on done?
has the home had foundation issues yet?
if this addon is years old and the home has already had a full house foundation REPAIR then you should be fine so long as the addon is suitable quality to you the buyer.
if this is a recent addon within a few years and the house hasn't suffered from foundation issues AND BEEN REPAIRED, then you can't expect foundation issues to arise in the future, costing you thousands in collective repair internal and external.
if you don't have an agent that can advise you on this type of stuff, RUN out and get one because this is only.the start of helpful tips and 101 awareness.
shawn@shawnmon.com
0 votes
Terri Vellios, Agent, Campbell, CA
Fri Jun 10, 2011
Talk with your agent. The problem is it is difficult if at all possible to obtain permits on an "after the fact" construction. Once the work is done you can't see what is covered up, the foundation, electrical plumbing, insulation, etc. If the work was not done to code a city inspector can flag the construction and make problems for transfer of ownership.

You are wise to understand what you are getting into before writing your offer, the language in your purchase contract may be in conflict with what you want to investigate with the permit office. Again, talk with you agent.

All the best to you.
Web Reference:  http://www.terrivellios.com
0 votes
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