Any risk in buying a house with finished basement without permit -Please advise

[bambam]

Our city keeps records.

In the case of plumbing, electrical and gas, the inspection tag is affixed.

Duh ...

Ken

[Trent©]

What I said was 'for the amount of the loan'. We're way beyond the point already that you bring up here. The loan has already been approved...yer credit has been checked, etc. Now they go out and see if there's a building there...and if that building is worth 120% (roughly) of what you want to borrow...assuming their gonna give you an 80-20 loan.

And, in my area, the appraisers NEVER come inside the house...nor do the insurance companies. Its a waste of time for them. All the insurance companies hafta do is ask questions about the house over the phone. Most will come out later and take a picture of the place...again, to verify that the building exists.

And, unless you have a newly built home, they have a database to do any necessary comparison checking.

I've seen a lot of hallways with closets...and a lot of other rooms that were not bedrooms with closets, also. And there are a LOT of bedrooms WITHOUT closets. My house has 2 of them. Many of the older houses were built without closets in the bedroom.

The room I'm sitting in now has a closet. I use it as a computer room for some of my computers. Its not on the tax assessment as a bedroom...simply because I don't USE it as a bedroom. But it was listed as a bedroom before.

They are classified as how you use them. Why would you think otherwise?

Of course not. If you have a bed in your bathroom...that doesn't make that room a bedroom. And you can also have 2 beds in the same room. I don't know where that 5th bed is located.

But if you have a full-size bed in a room, its pretty much an indication that you expect someone to sleep in it...ergo, its a bedroom.

The BEGINNING test for a bedroom is...is the primary purpose of that room to have someone sleep in it. Then more logical testing is done. For instance, if you have a very large bathroom...with a bed set up in it...that room would still be classified as a bathroom...especially if it was the only room in the entire house with a toilet.

Have a nice week...

Trent

Fighting for peace is like screwing for virginity!

[C G]

What you said is the banks only care that you have insurance for the amount of the loan. Now you are changing what you said to confirm my clarification.

In this area, and many other areas in the country, the appraisers come inside the house. The finish and condition of the interior is a significant factor in coming up with an accurate estimate.

They still do an appraisal which includes a walk through.

The tax assesor does not care how you use the room. They care if it could function as a bedroom. Are you sure it is not listed as a bedroom?

You are simply wrong on this. No matter how many times you say it you will still be wrong. I cannot reduce the number of bedrooms in my house by merely not using a room as a bedroom. You can continue to delude yourself, but you will not delude the tax assesor. Perhaps an older house which has bedrooms without closets could have this happen, but not a typical house built in the last 30 or 40 years.

And a lack of a bed does not magically make it not a bedroom.

Talk to a tax assessor or appraiser some time. I think you will find that your test is misguided.

[Trent©]

If they don't care how you use the room, why would they care if it can function as a bedroom?

If I am 'simply wrong', how can there be any 'perhaps'? lol

There are millions of homes that are over 40 years old. On my block along, there are 30 homes that are over 100 years old.

I think you've got your mindset inside that 30 year old house. Take a tour sometime of a 100 year old house. Those get appraised, too.

Again...I think you're thinking of only the newer homes...half or full bath built next to a room large enough to accommodate a bed. Pretty much defines the room, doesn't it.

But rooms in older homes aren't as definitive.

Last post by me on this.

Have a nice week...

Trent

Fighting for peace is like screwing for virginity!

[C G]

Because that is part of the way they price houses.

And millions more that are newer than 40 years old.

And the appraisers still can figure out which room is a bedroom, regardless of whether it has a bed or not.

Whatever. Continue to delude yourself if you want. The tax person is more than capable of figuring it out.

[Basha]

OK. I went to the city office directly and talked to one of the inspectors and few other guys in community development, construction and engineering dept. They said, once the construction is done they are not going to give any permit and they are not going to come to the house to check it. They also said the previous owner completed the basement and may not have reported to city to save some taxes. I asked is part of the house "ILLEGAL". They said it is not called illegal but improper, also said there are quiet a no of people who don't report their enhancements to their houses which may involve adding a bathroom or bedroom etc. The risk is whether they have done the proper electic and plumbing work or not. I asked him how to ensure whether it is done in a proper way. He told me it is very difficult to find out once it is done. It may involve tearingup the sheets covering the electric and plumbing work. He also advised me to ask the seller to put a $10k in an escrow account which cover up the costs if anything happens in the next 3 or 5 years. If nothing happens at the end of 3 or 5 years, seller will get the money back.

Anyways, my realtor brought a market analysis of the houses in this area (Plymouth, Minnesota) and we came to an amount which we can offer. We offred the seller 5k more than the average selling price and also I bear all the minor repairs in the house. The average price is

20k less than the seller's list price. Repairs in the house are: One of the closet door broke may need a replacement, all the sloset doors are stick to the carpet and are difficult to open and they may need a half inch cut at the bottom of the doors. Family room doesn't have the the air intake, hot air comes from the furnace but there is no vent to take the air from that room. It's a closed room. Back side of the house some of the vinyl sheets came out of the wall. It needs a fix and there are many other small things. Those I can do myself. (My realtor said the total may cost around $3000). 2 days back we bid with condition-asking the seller to put the money $10k in escrow account. Seller rejected the bid asking $10k more and didn't like the condition of keeping the money in escrow account.

That's what happend in the last week.

The house is 1994 built, split level completely finished (2260sft) in Plymouth, Minnesota. (suburb of Minneapolis)

-Basha

[v]

Shows you what happens when you take real estate advice from an inspector.

Chances slim to none that any seller would agree to skip $10,000 for 3 to 5 years, based on the buyer not coming up with "ANYTHING" in that time. What a crock of bull, you showed yourself to be a fool if you tried to impose this under those circumstances.

(BTW, what did your bank think of the $10k escrow? Or didn't you ask them yet.)

-v.

[v]

Have you bought many properties where the Seller agreed to pay for

*any* problems that turned up? I have been buying and selling for over 20 years and it just doesn't happen frequently enought to be a realistic suggestion. (I've never seen it happen at all, but in then infinity of the net, am leaving a way out.)

Sure the Buyer can have an inspection. But the Seller is HIGHLY UNLIKELY TO THE POINT OF IT BEING RIDICULOUS TO EVEN WASTE YOUR TIME ASKING, to agree to fix "any" problem found. Buyer can show the Seller the problems and ask, or even get an agreement that (say) the first $1,000 in repairs is covered, but rational sellers will not agree to open ended clauses that encourage the Buyer to try to get a free renovation out of the sale. And if you ask for unreasonable stuff, you are likely to piss off the Seller and get thrown out of the deal and NOT get any concessions.

And don't say how do I know the Seller won't NEGOTIATE, SURE he probably WILL "negotiate", but that is not the same as agreeing to your ridiculous terms. Whatever makes you think he WILL agree? And DON'T say there is no harm in asking, there certainly is, if you knew anything about negotiation.

-v.

[Brad]

Septic and wells are the main exceptions to that rule. If a septic or well fails inspection the seller has to fix or replace it and will typically not get a penny more on the market for the house. It happened to me. I never understood why the market worked that way because if I'm comparing two similar septic houses, the age of the systems is a big factor for me.

[C G]

Yes, I have. If there is a problem that needs to be fixed the seller is going to have to either pay for it, lower the price, or tell the buyer "no deal".

The trouble with this seller is that he did something in violation of local building regs. The buyer in this case has him by the balls.

Are you finished arguing with yourself? I never said he would agree. However, since he's in a pretty difficult situation, the odds are good he would.

[C G]

You're just full of yourself aren't you? It must be an awesome task to be omniscient. "The seller won't do this". "The seller won't agree to that". You should write some books to share your amazing grasp on human behaviour.

[Trent©]

No matter WHAT happens in the basement?...and no matter WHAT causes the damage? Would YOU agree to such a thing?

1. If its CERTAIN that yer gonna be the only bidder on that house in the next 3-5 years, then that proposal MIGHT fly! If not, he'd be just as well off just keeping it listed...and taking his chances.
2. If he's mentally incompetent to sell the house, he may indeed go with that idea. I don't think anyone in his right mind would go for it, however.

A market analysis is interesting to look at. Other than that, it has no real value to the buyer. The seller MIGHT have looked at one before he listed...or even did one of his own. But the buyer usually buys the house thru emotion...or that of the spouse.

If you want the house bad enough...and if you don't piss off the seller so that he won't sell to you...you'll buy the house.

If he would have accepted, I would have been REALLY worried if I were you! lol

$10k more than WHAT?. I lost track! lol

What amount is on the table? What's the offered selling price now?

No sane person would...who has an otherwise saleable property. You can buy extra insurance if you think this may be a problem.

If yer SERIOUS about buying this house...and are not just posting here for your health...and all those minor problems are the only problems you could find...and you REALLY want the house...then...

I'd buy the house. Life is a crap shoot, anyway. The homeowner seems to be conscientious.

Yer there...and its your money! So...you decide.

Have a nice week...

Trent

Fighting for peace is like screwing for virginity!

[Steve]

Just some friendly advice:

Real estate people don't give reliable estimates of what repairs will cost. Especially when you are the buyer, and the recipient of these estimates. It's not their area of expertise, really, but they do have ample motivation to answer those questions and smooth things over. $3000 may cover it, maybe only if done poorly by a very low quality contractor. It may not even cover it then. Also, asking a seller to throw $10k in escrow against unknown problems is pretty wishful thinking - think about it, given reversed roles, would you be willing to do it? There's always someone, somewhere, who will buy as is.

The bottom line is that any house is a risk. Even one unmodified by the owner, in apparently good shape could have killer black mold hanging around somewhere waiting to bloom. You'll drive yourself nuts trying to cover every liability. In the end, you have to seek trusted advice about what real problems the house has, use your own eyes, and make a decision. Find or hire an independant handyman, and pay to have him estimate the work that needs to be done - then you know, and you have a somewhat documented case for adjusting the price to cover repairs. Also, the handyman/contractor's advice about the house would be a valuable addition to the inspector's. Inspector's are good for checking some major things, and certain safety things, but they miss some very obvious things you will end up having to fix.

Just remember, when you are the buyer, and the agent says "Oh, that? That's no problem!" they really mean "Oh, that? That's no problem....for me!"

[Tony Hwang]