I am cuurently in an escrow with a not too uncommon issue. Illegal or an unpermitted addition exists at the house.Some of you may have read here or elsewhere that I published a blog on the differences between FHA and Conventional financing. THERE AREN"T ANY...as far as a seller is concerned. They specify what is necessary to close are far as inspection items and if it is missing the toilet...well that will be a problem, except for cash offers.The heat is turned up when there is an illegal addition, like a non permitted patio enclosure. True to form the appraiser went to the city to inquire about permits and and found there was not any for the patio modification. The Chino building department did a driveby and susbsequently issued an order that it be taken down back to the roofline of the original house. Here we are now stalled, waiting for the seller to fix it up. Although my buyer is ok with the correction needed, the listing agent is left with an embarrassing situation to explain to the seller (luckly this is a normal sale) the current state of things.We as listing agents need to do our diligence and pull permits on our listings , especially if something seems questionable. We would not look good to the asset manager if we acccepted a financed offer and then said" Guess what? We need $2000 to bring the property into compliance with code." We will then be able to advise the AM that there is a potential situation here and seek direction on how to proceed. I notice all too often that things say "AS IS" but there are certain items that need to be expalined to a potential buyer upfront that THEY will have to restore the residence and that will drop many aspiring homebuyers and unless they are able to get FHA203K financing. I am glas the appraiser took this extra step with my transaction. Know too that some companies will do a pre sale inspection for the seller at about $150.00 . That is stress relief in itself and should be made a standard practice. Homeowners get all too creative with their homes. Finally I submit this actual excerpt I got from my loan officer:
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