Unpermitted Work: What First-Time Buyers Need to Know

As realtors working with first-time homebuyers, we see it too often: beautifully staged flip properties that hide potentially expensive problems. While natural hardwood floors and bright open layouts catch the eye, what's behind those picture-perfect walls could cost you thousands in repairs and insurance denials.

The Hidden Risks of Unpermitted Work

Recently, we toured a home with a buyer where the seller had completed several major improvements: a new roof ($15,000), electrical panel upgrades ($3,000), and a new AC system ($8,000). The listing agent confidently stated that none of these improvements required permits. This kind of misinformation is not only wrong – it's potentially devastating for buyers.

Let's be clear: all of these improvements require proper permits and inspections. A new roof isn't just about laying shingles – it's about ensuring proper installation, load calculations, and ventilation. Electrical panel upgrades are even more critical, as unpermitted work could create fire hazards and void your home insurance. We've seen insurance companies deny $20,000+ water damage claims due to unpermitted plumbing work. Even AC replacements need permits to ensure proper sizing, electrical connections, and energy efficiency compliance.

Don't Be Misled by Common Permit Myths

We often hear listing agents, particularly those representing investors, claim that permits weren't necessary because the work was done in a "workmanlike manner." Others might tell you that interior renovations don't require permits. Neither statement is true.

Remember, listing agents represent the seller's interests, not yours. Their fiduciary duty is to their client – the seller. While they might minimize the importance of permits, your interests and financial security could be at stake. The only way to be certain about permit requirements is to consult directly with your city's building department.

The Real Impact of Unpermitted Work

The consequences of buying a home with unpermitted work extend far beyond the initial purchase. In the South Bay, each city has its own building and safety requirements. For example, in Gardena's building department, discovery of unpermitted work often means hiring licensed contractors, pulling retroactive permits (which can cost 2-3 times the normal permit fee), and opening up walls for inspections. We've seen buyers spend upwards of $40,000 bringing unpermitted additions up to code.

Even more frustrating is how unpermitted work can complicate future home improvements. When you need to make necessary updates to your home, existing unpermitted work might be discovered, forcing you to address those issues before proceeding with your planned improvements. This can delay your project and significantly increase costs.

Selling or Buying Homes with Unpermitted Work

Homes with unpermitted work can still be sold or purchased, but transparency is key to ensuring a smooth transaction.

Why Unpermitted Work Matters

For buyers, unpermitted work might seem like a minor detail, but it can have serious consequences. Beyond safety concerns, it can affect your ability to insure the home, refinance it, or sell it later. Sellers, on the other hand, must disclose any unpermitted work and may face potential costs to address it before listing.

We’ve helped buyers uncover unpermitted work during inspections and negotiate with sellers to address the risks. For instance, one buyer secured a $16,000 credit to bring unpermitted electrical work up to code, ensuring their home was safe and insurable.

How to Handle Unpermitted Work

1. Do Your Research: Verify permit history with the city’s building department.
2. Budget for the Unexpected: Plan for possible corrections if the work isn’t up to code.
3. Negotiate for Repairs or Credits: Use inspection findings to negotiate with the seller.
4. Hire Professionals: Work with licensed inspectors, contractors, and your Realtor to understand the risks and solutions.

With these steps, unpermitted work doesn’t have to be a dealbreaker—it can even become an opportunity to improve your new home.

The Importance of Pre-Sale Inspections

Home inspections, which typically cost $500-1,000, have saved our buyers significant money and stress. Last month, an inspection revealed unpermitted electrical work that would have invalidated our client's insurance. Another caught an unpermitted bathroom addition that wasn't properly vented, causing hidden mold growth.

These inspections aren't just bureaucratic hoops – they're your first line of defense against buying a property with hidden problems. When issues are found, we've successfully negotiated credits for our buyers to address the problems properly. Recently, one of our clients received a $16,000 credit after discovering unpermitted electrical work.

Making Smart Decisions in a Competitive Market

While it's tempting to overlook potential issues when you find a seemingly perfect home, our successful buyers take these steps:

1. Request permit histories before making an offer.
2. Budget for possible corrections.
3. Get written confirmation from the city about permit requirements.
4. Use inspection findings as negotiation leverage.
5. Consider the long-term implications for insurance and future improvements.

We've helped buyers turn potentially problematic situations into opportunities. One of our recent clients received a $16,000 credit after discovering unpermitted electrical work, hired a licensed contractor, and now has a properly permitted, safe home.

The Bottom Line

Understanding permit issues isn't about being overly cautious – it's about making informed decisions that protect your investment. When you know what to look for and how to address these issues, you can turn potentially problematic properties into solid investments.

Let's Talk About Your Home Search

Buying your first home is a big step, and having the right information matters. Have questions about permits or renovations? As your South Bay neighbors, we'd be happy to grab a coffee and discuss your home-buying plans.

Schedule a complimentary virtual consultation via https://app.acuityscheduling.com/schedule.php?owner=33799638, or reach out directly - whatever works best for you! Contact Yoshiko at 310-564-8810 or [email protected] and Russell at 310-846-8482 or [email protected].

About the Authors: Yoshiko and Russell are South Bay Realtors who've helped 27 first-time buyers navigate the home buying process in the last two years alone. We focus on providing clear, practical guidance to help our clients make informed decisions that work for their long-term goals.