There are many times when a home has a substantial amount of square footage that is not reflected on title information.
It could or could not be permitted, but the main issue is how to deal with it when appraisal time comes around.
I spoke to a few appraisers regarding this issue and the consensus is that if the extra square footage is not permitted, then they really cannot give it any value.
So in essence, the value has to come from the prospective buyer. If they love the home enough, they are more than likely going to have to come up with the extra cash deficit that the bank will not lend on that was agreed to on the purchase contract.
Either that or both parties will have to re-nogetiate price, if that's even possible.
As a listing agent, it's probably best to see if it's possible that the extra square footage is possibly permitted from county records.
Another approach is to disclose that the buyer will have to verify permits on their own.
But the best thing to do is discover as much as possible and put it all out on the table.
Non-disclosure is a recipe for disaster.......................
One of those problems that should be flushed out by the Listing Agent, but rarely ever is.
Ralph - spoken like a pro ... non-disclosure is a receipt for disaster. "Permits Unknown" is the term I use.
Our MLS rules say if it's not permitted we are not allowed to count it as finished square footage on the listing. Here in the Triangle NC area we're still stuck on that price per sq ft ! I always encourage sellers to get permits as there have been many issues regarding unpermitted additions, etc.
It amazes me just how many homes in Los Angeles have unpermitted space. Do you think that has to do with home owners not wanting their property taxes to go up or just laziness?
Ralph - A word of warning about having buyers verify permits. In addition to not getting any value for the unpermitted square footage, but if the unpermitted square footage is not up to code, the seller may even get fined if the buyer verifies with the city that the square footage is indeed unpermitted. At that point, the city then has the right to come out to inspect the property to see if the addition is up to code. If it's not, the seller may get fined. I speak from experience when I say this.
It is best for the home owner to make sure they get permits before they do any work on a house. Unfortunately, a lot of people don't bother, and do the work anyway, causing all kinds of problems in the future.
If I get a listing that has non permitted square feet I ask the seller to get a permit after the fact and that usually works. One way or another I am only advertising the permitted square feet and disclosing if their is non permitted square footage.
Disclose all known facts and get copies of all permits!