I would have the town inspect the bedroom and bathroom and tell you what needs to be done to bring the additions up to code. Maybe not so much as to kill the sale.

First time buyer using FHA loan is going to be a struggle. Call the permit desk of the county and find out what it will take for seller to get permit and bring to code. Put in the offer the seller has 10 days to pull the permit and complete the inspections. Make buyer contingency 21 days and don't order an appraisal - wait and see what county says. Get a building inspector who is a licensed contractor to look at what they did, and a cost to cure any health and safety code violations. Buyer might be able to do a 203k (get money to fix it or Homestyle conventional - a mini contruction loan) Problem is 1st time home buyer is going to need MANY extra hours to get this deal done. Buyer should be ready to work with a contractor and fix all the things that are hidden. Does seller live in property? IF seller does not reside in property assume that nothing works

There are just so many things about this transaction that are bad.  FSBO, no permits, maybe no possibility of permits, first time buyer, who pays commission, etc.etc.  This makes Pandora's box look like a toy.  Both of you should be running.

Is there a way to have those rooms retroactively permitted 'as built' by your city? If so, it may not be as huge a deal, and perhaps you can negotiate for seller to spring for the cost of the permits and whatever it will take to get them there. It otherwise is a numbers game - is your buyer getting a sufficiently good deal to mitigate this?

Yes and yes. I limit to cash only buyers on these issues by going to county checking out permits etc. In one case it had 3 redtags on it. They tried short sale in the past but too complicated..... 

Discuss the issues, the ramifications, the options, the whys, the hows and more with your buyer(and make sure the lender is aware if applicable).  Let him/her/them decide.

Advise your buyer to run, if they don't get it; step away. You don't need to be involved in a E & O Claim even if you can document notice. Your E & O carrier will not forget.

FSBO AND AUCTION.

Your buyer has made DELIBERATE choices to go onto the thin ice.

Advise the buyer this will be a CASH deal and advise regarding what will happen when the buyer decides to sell. Get YOUR disclosure signed.

Some people can not be protected from themselves.

Speak with the seller, see if they want to list with you and let them know you'll help get everything straightened out for them and keep them from being sued.  Start there, if they won't list you need to do everything possible to prevent your client from buying under the current condition.

It depends. Price could be a factor. Or if it's on well and septic, I would be curious about the size of drain field. Auction properties are usually " as is". If the work looks like it was done properly, and the price is right, I wouldn't care about permits. That can be inspected and upgraded later if need be. Check HVAC, furnace size, plumbing, electrical, etc. Ask buyer if he has any construction experience. If it was an addition to a house, i would also be curious about the insulation, and maybe check attic above. Check foundation also if it was an addition.

Gary,
That is a common situation here in Colorado.

# 1 What is your first time buyers tolerance and willingness to work on this issue?

# 2 Is the house worth the trouble or can you easily find another one for them?

# 3 Here, it is fairly easy to get retroactive permits.

Always a solution for every problem, however first time buyers may not be up to the challenge.

Gary - We have a lot of home owners doing their own remodels, additions, here in my area of AZ. When this is the case, I let my buyers know that it probably has not been permitted, and most of the time, it will have to be. Buyers typically ask me to show them other homes at that point.

 Good morning Gary. Perhaps you can have the property evaluated by the local codes department to see if it meets their minimum standards.

That certainly is something that you have to share with your client and let them decide.  A lot depends on where the house is.  Here in DC, there are entire home renovations that have been done with no permits.  And when people went to the trouble to get permits, they were usually misfiled.

Non Permitted additions are not that big of a deal in my market. If the work appears to be done well and an inspector finds no issues ... it would not be a deal breaker unless the buyer decided it was.

I would tell them that they need to check with a real estate attorney and I would encourage them to run not walk away from this FSBO. 

Your buyer should consider consulting a real estate attorney.

Ouch! I've seen it happen all to often.

Depends upon several things...

What is quality of a non-permitted add on?  Looks professional or cheesy?

What is the purchase price?  low end or high end?

Is this typical of the neighborhood?

Either way...

I would write the offer subject to the seller getting it permitted.  We have many times gotten the seller to pull permits after the fact...most have not been as big a deal as expected.

Eve

In my area, many thingss do not need a permit.  I would inform the buyer.  Talk to the governing authority and if you get past all that have a home inspection done.  Just because there was not a permit doesn't mean the structue ins't good

Gary L. Waters, Broker Owner, Waters Realty of Brevard, LLC Since no permits were pulled, it may be an issue of being built to code. Fred Hafdelin has a good answer.

Sounds pretty risky to me, and who knows what else is not being disclosed

Many additions and rehabs have been done without permits and do not cause a problem.  As Fred said, have someone inpect it.  As long as there are not any problems, don't worry about it.  Many times rehabs over 10 years old (when most people did them without permits), would already be showing problems,  if any.  Make sure you get all properly signed disclosures, so that you can deal with any other problems that pop up.  Good luck!

Have an inspection by the city done as a post permit type at the seller's expense.  Then you will know what needs to be addressed in an inspection list.  

Gary L. Waters, Broker Owner, Waters Realty of Brevard, LLC 

I had similar situations in the past including one with a roof that was not permitted after the 2004 hurricanes. 

In your case, it sounds like the seller did not know about the permit issue. So I would focus on the solution and send a contractor out for an estimate on getting it permitted. Tell your buyer that once you have the contractors estimate and opinion on workmanship, he will be able to make an educated decision on the purchase. 

This way you are helping both parties achieve a win / win. If your buyer ends up canceling you may still pick up a listing from a thankful seller. 

I am a little confused about the seller. Did he purchase a foreclosure at a Auction? Is he an invstor buying a Non Performing Note? Is he an out of state seller or local person? Many investors buying and flipping foreclosures or NPN are not that interested in curing work done without a permit. Most are sold As Is and for a first time buyer it can be a nigthmare.

I  will try to find out what is the seller's motivation now that non permitted additions have been brought to light. Do I hear lower offer? Contact an appraiser and try to determine what is the actual value of the property and if non permitted are even to code. The seller might even use your services as an agent. Good luck on this one.