Frequently, I am asked by Long Beach home buyers and sellers about permits — how important are they? The answer is — very!
If you are making additions or improvements that you think the city may require building permits for, then GET THEM! And if you’re not sure, then head to Long Beach City Hall or call the planning and building department.
I have had Long Beach buyers who cancelled transactions because of unpermitted modifications or additions to homes. Home improvements can be pricy and sometimes homeowners in Long Beach and elsewhere choose to cut corners by not paying the permit fees. But that can be false economy.
When a homeowner sells, the California Association of Realtors (CAR) disclosure forms specifically ask whether there are any unpermitted additions or modifications. The appraiser may check to see if there are bedrooms, bathrooms, or additional square footage that is unpermitted. And the underwriter may request permits. Neither appraisers nor buyers will assign as much value to additions that aren’t permitted.
Recently, we had a Long Beach home sale that almost fell apart because the seller had added a bathroom, a built-in spa, an outdoor kitchen and a bathroom — all without permits. The appraiser noted the unpermitted improvements and the underwriter requested permits. Because they weren’t able to obtain a loan without permits, the home buyers threatened to cancel if we produce permits. The seller said none of the items were permitted but getting them would be “No problem.”
In this case, we were lucky because everything had been built in a workmanlike manner and the owner still had drawings and photos of before, during, and after. The city of Long Beach worked with us. However, it caused more than a month in delays and additional expenses as the buyers rate lock expired. The seller had to spend money to get an engineer to produce a detailed report on a rush basis.
The seller’s reason for not getting the permits in this case was to save money on the permit fees and to avoid having his property taxes increased. In the process, the buyers almost backed out. If they had, he would have probably ended up selling the home for thousands of dollars less because while we were grappling with permits, several comparable but lower priced properties had been listed in his Long Beach neighborhood.
You know what you’re saving when you cut corners… But do you know what you’re potentially losing?