(08-15-2024, 07:09 AM)tikicarver Wrote: I can see your point about selling it in the future...
On the other hand,, several years ago when we were shopping for house on Oahu,, every property we looked at had un-permtted additions or structures.
The listings all said, " square footage does not match county records"
It did not lower the price the sellers were getting. and people were still paying over asking price.
What it did effect was apprasied value. The appraiser would not count the square footge of unpermited spaces.
So for example if the listing said 1200 sq ft,, but they were counting the converted car port as part of the total house sq footage.the appraiser would
say there is only an 800 sq ft house and base the value on that.
If the appraised value came in lower than asking price, the buyer had to make up the difference in cash because the bank would only loan to the appraised value.
That is differnt sitution than the entire house not being permitted. But it shows there is a lot of unpermitted stuff in Hawaii that still sells.
Unpermitted additions are decided on a "case by case" basis. It used to be that VA would never loan on a property with an unpermitted anything, even if it was something super minor. In the last few years they have relented and adopted an approach similar to other lenders, that if the unpermitted change was minor, and the build quality similar to permitted, or if it was so old the test of time has proven it wasn't going to burn down or blow away, the lender might lend on it, but its at the mercy of the appraiser and/or the underwriter.
Example: Fully permitted, newer home in HPP. The owners converted a small AG structure (a shed) in the back yard into an Asian-inspired bath house. So, a soaking tub with hot and cold water coming from hoses from the house. The appraiser called it an "unpermitted ADU". What? Other than the tub there was nothing else in there, and no room for a twin mattress if they wanted to. No kitchen, no residence amenities of any kind, other than a soaking tub. Nobody expected it to add any value to the property so that wasn't the issue. All the underwriter saw was "unpermitted ADU" and pulled the loan a few days before closing. The property did eventually get a loan on it without having to tear down the "ADU" but it was long, stressful, unnecessary struggle. It delayed the closing long enough for the buyers, who were selling their own home on Oahu, to store their belongings last minute and scramble to find a place for them and all their animals to live. Staying in a hotel, motel, Holiday Inn, wasn't an option. It could have blown the whole deal up, over a serious nothingburger.
Of course, these things aren't an issue if one finds a cash buyer, but that is going to limit the pool of buyers enough a seller is unlikely to get anything close to fair market value compared to a similar property with permits. At the end of the day, and this is just my opinion, the future value of your property (the financial loss your family will take by having the unpermitted home) will be greater than what you would have spent by getting the permits. That's what I meant about the permits being an investment. You can either deal with the stress and frustration of the permitting process now, or bequeath an equal or greater amount of stress and frustration to whoever inherits it. For most people, going the unpermitted route doesn't eliminate the financial and stressful components of having a home, it just kicks that can down the road, and some people find themselves on that roadway at place in their lives where they are less able to deal with it than they were when they made the original decision. I've heard a lot of stories of regret from people going the unpermitted route, but never any stories from people high fiving themselves on what a great decision they made. I'm sure those people are out there, but my guess is that most of them haven't had to deal with the consequences yet, or they are in a situation where getting 70% (or whatever, it's a made up figure) of their property's potential value isn't a problem for them.
FWIW, I've done unpermitted things on my property. They won't add any value value and can quickly / easily be undone if they should ever be problem. I think going into unpermitted territory isn't necessarily a bad idea so long as one invests in the "undoing" of it from the onset.