Tuesday, September 21, 2010

Permits-Schmermits!!! Looking at Another House...

We've found another house that we would LOVE to own!!!

This is not a knife catching article as we actually want to put an offer on the place and it seems sleazy to write an article bashing a house that we think we actually want to own. So while I'll describe the house and the issues I will be sufficiently vague.

Its a good size 3-2.5 of ~2100 sq ft on a nice sized lot ~6700sq ft lot built in 1907 of the Colonial revival style. The house is in a better school district (Otis) than our current house and its in an interesting location just a block off the major commercial corridor of Park St. So its a short walk to lots of fun stuff like coffee shops, restaurants, movie theater, etc.

The sellers are asking a not insignificant $865k for the place....

The house layout will work for us with sufficient common area, workshop, storage and a big backyard. Its got a nice new kitchen, new bathrooms, new paint on the exterior and interior, its got a lot new.

What's the Problem?

The Price- With several houses with similar specs that were forced to reduce their prices below $800k to sell, the $865k does seem a little optimistic. The short list of houses that we've looked at and thought that they were overpriced for the condition is, 2143 Alameda Ave, 1310 San Antonio, 1290 Caroline, 1831 San Jose Ave, 1417 Central Ave, 2132 San Antonio Ave, 1832 San Antonio Ave, and 2157 San Antonio ave.

Whew, that was a lot of houses that are all basically comparable who had to reduce their prices below $800k to sell... Wonder what the listing agent is thinking? The house has ~$18k in pest AND the pest inspector didn't even inspect the outbuildings which look to be in BAD shape...?

The Permit Situation- In other places with un-permittted work we never seriously considered buying them but this time its different..

Holy Friggen Mackerel Is There A F-Ton Of Un-permitted Work!!!!
Here is my preliminary list of work that was absolutely done recently without permits.

  1. Complete remodel of kitchen: New electrical, new cabinets, new appliances the entire thing is new.
  2. Turned a 1/2 bath on the bottom floor into a full bath! This had to of been a gut remodel. The new full bath looks great, but its completely illegal!
  3. Turned a closet in the Master Bedroom into a weird little half bath.
  4. Completely remodeled the existing full bath on 2nd floor.
  5. Finished a basement with drywall, lights, outlets, carpet, etc.
  6. Added a sub-panel in basement and did extensive electrical work. Lots of recessed lighting on both floors.
  7. Two new NG forced air heating units, one in basement and one in attic.

So, me and the showing agent of course had a 'nice' conversation about this..... Unlike some Realtors she was honest enough to put in her own disclosure that extensive work was done on the house without permits. The home owners have not done a disclosure yet....wonder what it'll say? The Realtor started to use the argument that home-owners are allowed to do their own work if its up to code...ya but you still have to pull permits for it!! And there's no way that these people did the work themselves and ANY contractor working in Alameda should damn well know that the above work requires permits.

Now, you gripe all you want about 'permit fees' being onerous or the inspection process being a PITA....but seriously, it looks like these current owners are just trying to pull a fast one. They are not paupers, in fact I'm told that they are retiring to a house on the shore of lake Tahoe (cause that's where all the po' folks live). Their house has NEVER been reassessed since they bought it 15 yrs ago! They are paying taxes on a value of $398k! I'm pretty sure that the above work, if done with permits would of triggered at least one reassessment....so, these wealthy folks have been cheating the system.....isn't that how it always works?

Why 'No Permits' is a Bad Thing- The sellers own house inspector called out a TON of issues with the electrical work that NEVER would of passed an actual building inspection. Issues like, scary basic electrician 101 stuff, like double tapping circuit breakers, outlets wired up backwards!?!?!?, over-fusing wires (from the new illegal sub-panel). To the super-dangerous, Federal Pacific Stab-lock main panel that has a 100amp main breaker when it was designed for less. To the over-fusing of the original wiring-putting 30amp fuses where 15-20amp fuses belong!

Also some basic plumbing things like not installing an air-gap for the dishwasher, and running the wrong kind of venting for the kitchen exhaust.

So, the sellers where willing to find 'professionals' who where willing to work without permits and surprise, surprise they got sub-standard work!!!

Here's what's scary, all the electrical, plumbing that was required to do the above work, its all hidden now, what sort of work is it? I think its safe to say that its probably of the same caliber as the exposed work....which means it could all be a huge ticking time bomb.....

There-in lies the rub..... We want the house but the 'hidden conditions' scare the poop outta us...especially for the price they're asking....What I'm trying to figure out is, whats a reasonable discount for the condition?

Having no idea what exactly the mess we'd be in if we bought the place as is I went down to the building dept to ask them.
Without giving the address I explained the work that I thought was done without permits and asked what was the most likely scenario.

The most likely scenario is this- We'd have to write up a set of plans for all the work done and have it 'verified'. We would have to pay all the permit fees which go like this.

  1. Kitchen Remodel- $1400
  2. Bath Remodel- $1100
  3. Bath Remodel- $1100
  4. Bath Remodel- $1100
  5. Finished Basement- $2375
  6. Sub-panel-elec work - $350
  7. Heating-$600

So that's $8,025 in fees alone. During the course of inspections the inspectors will absolutely require us to open walls to verify hidden conditions.... Now what's the chance the inspectors are not going to find a ton of below code work? Pretty slim I'd say...So we'll have to pay to have all the work brought up to code (what's that going to cost) and everything patched up. That is, if we are even allowed to do the work. The basement work will have to be torn out unless we apply to make it habitable space-which requires a major design review of $2500...

Here's the great part....if someone finks on the current owners then the city will quadruple the fees required!!! Now that's starting to become serious money! So the innocent but ignorant new home owners could have a huge bill waiting for them...

So, I'm at a loss as to whats a sane price for the place....What sort of monetary fudge factor needs to be built into the offer to take care of this super large potential can-of-worms?

Anybody have any ideas?

10 comments:

Mark said...

Holey-moley, that's a lot in permit fees. No wonder people try to skirt the rules! I don't think I paid $100 in permits for my full bathroom remodel. Ref: http://cityoflacrosse.org/index.aspx?nid=118

The MadScientist said...

Well I think its a matter of perspective. All those fees are worst case scenario.
And even given that they are probably less than was spent on the fancy kitchen counter tops in this house.

Anonymous said...

Dan, who at city hall would you contact if you wanted to report un-permitted renovations? There's an investor who has purchased a few foreclosed/auction properties in Alameda and is flipping them at ~$200,000 above purchase. The flipping, whatever; the un-permitted work, BS. The properties are newish listings with no permit histories for any of the completed work (kitchen, bath, mechanical, roof, and so forth). Screw free-riders especially if they're fly-by-night investor groups.

The MadScientist said...

Anon,
There are two ways to report a building code violation. One is to down load and fill out this form http://www.ci.alameda.ca.us/planning/pdf/Code_Violation_Complaint_Form.pdf and then mail it in...
Or you can call the building dept main line 510.747.6850 and be asked to be transfered to the anon complaint line. There you can leave a detailed voicemail with the addresses and specific nature of the complaint. Be as specific as possible to the type of work being done.
Course, none of this matters if the buyer's or their Realtor don't look up the permit history and call them on it.

Anonymous said...

Thank you very much, Dan. Good luck with the home search, the renovation, AND HALLOWEEN!!!!

Ragnar said...

Well basically I'd figure redoing the whole stuff if you don't trust it - rewire and replumb for the whole house,... you mentioned fuses, that seems to hint that there is at least some fairly old wiring left.

I guess if the stuff is as bad as you seem to suspect, it'd be tempting to pull permits fopr a full redo instead of having the existing work permitted after the fact...

The MadScientist said...

Basically I would be pulling permits for a full redo.
The inspectors will make us uncover a lot of stuff and then fix any issues they find of course...so Its basically the same thing.

L. Opine said...

For what it's worth the house sold for its asking price ($865K). Are you the buyers? That's way too high, even though the house is lovely.

The MadScientist said...

Nope we are not the buyers... :(
We did put a serious offer on the house but got blown outta the water by the folks who won....

I heard that their offer even blew away the listing agent..as in it had no contingencies. The new owners apparently didn't even care about all the unpermitted work!

Fortunately/unfortunately we choose not to compete with people who have waaaaay more money than sense.

What do you think of all these houses listed lately for more than a mill? They're not exactly selling like hotcakes are they?

rogthefrog said...
This comment has been removed by the author.