Help! Can an Owner switch # of BR's mid-negotiation?

Question

Hi. I'm renting a property that I'm currently in mid-negotiation to purchase from the owner. I've had about 6 inspections from various professionals done; the only one I'm waiting on still is the Independent Appraiser's report, but he's indicated to me that not only is the property a 2 BR, 1 BA, but also that he's planning on reducing the square footage GLA of the house by 30% due to non-permitted addition in back. The Owner doesn't know this yet. In addition, I've confirmed with my Contractor, Home Inspector, Foundation / Pest, Sewer Lateral and Plumbing professionals (with estimates) that there are a great number of repairs necessary to transform this 100-year old building into a permitted and habitable one. Meanwhile, the Owner's been driving hard to have this property assessed as a 4 BR home in contradiction to every online assessment available. He's done this all mid-negotiation, without an agent. Do I have any recourse to this bait and switch?

Thomas F. Byrne · Answer

thanks all for the great advice. As a final bit, I should add that the owner is without agent, fsbo: is he not acting as the realtor in this situation? There is no septic in this situation. I've been to city bldg. dept. to seek inspections, but need to file a complaint (which automatically alerts the owner). Instead of playing that aggressive card (which I could do), I've asked the Owner to schedule an inspection with the city. This request has been unanswered thus far. Finally, I did have a contractor come through the building. He's the one who described the property as uninhabitable and unsaleable, and gave me estimates as to repairs, but not what it would cost to seek proper permitting.

Colleen F. · Answer

No there is nothing you can do about the owner changing things on Zillow and redfin, if it was a realtor they have some obligation  in advertising. My sister bought a 4 bedroom that was relisted as a 3 bedroom because it only had a 3 bedroom septic. The bank had to use the smaller number as did the realtor.  However, the value is what people are willing to pay and will be able to finance or buy the property cash for.   If you are financing you are dependent on the appraisal for supporting your  offer price.

I haven't seen the deduction of 30% for unpermitted additions however, it does make a difference in value that the additions aren't permitted. For example if the house has two unpermitted basement bedrooms people are not going to pay for those rooms the same as two standard ground level bedrooms but they may retain some value to a typical buyer as finished space.   If you are trying to agree on an accurate price you have your appraiser and the inspection. The appraiser follows certain rules.  The inspection gives you some things that you can devalue the market price  offer with (lack of permitting for space can be one of those).  You can also call the town and ask what the process would be to permit the additions (and you may want to do this if you plan to buy the house).    You could even get a contractor estimate on what it would cost to bring the rooms to code that aren't permitted (the city is not going to provide that information but the city could tell you if they would not be able to ever be allowed).

Thomas F. Byrne · Answer

The appraiser has indicated to me that he not only plans on writing his report to illustrate a 2 BR, but also that he will reduce the square footage by 30% due to the non-permitted additions. So is there anything I can do about the Owner manually changing online assessments to 4 Br in an attempt to raise the price?

Jason D. · Answer

@Thomas F. Byrne it doesnt matter what Zillow am redfin have. That's not what an appraiser will use to count rooms. The owner can do whatever he wants. The number of bedrooms are the number of bedrooms.

Frank Geiger · Answer

My guess would be the owner already scheduled a city inspection for the addition and it was denied likely from not meeting code.

Thomas F. Byrne · Answer

Well the first day of my research was getting all county info. And it reads 2 BR, 1 BA. Now the Owner tells me he's gone to Zillow and Redfin and has manually changed the assessment to 4 BR, 1 BA. Even if he's found some rare assessment in a strange corner of the internet: 1) none of these BR's meet ASHI requirements, 2) none of them are permitted, 3) he's simply using this imaginary re-assessment as a negotiating ploy it seems. How is this not a misrepresentation? (by the way, to date I've requested the Owner schedule an inspection by city inspectors so I can get an idea of what it would cost to bring the building into compliance. Dead air from his side so far).

Wayne Brooks · Answer

There’s no bait and switch, it is what it is. The seller may want to “count” the extra addition, but so what. You pay what You want to pay.

Colleen F. · Answer

I take it you currently live in the house so I expect it is habitable.  The number of bedrooms are noted on the tax roll for the town. Then thier are the number of bedrooms that the building department recognizes.The later is what an appraiser usually uses to determine value. Sometimes these two numbers dont agree. The house will appraise and you can get a loan only on what the building department says and your apprasier agrees to not the seller.  I hope you have an appraisal or financing clause if so that will take care of any issues.