Egress Window Question. Just went under contract for "4dbrm"
Hello!
I just went under contract for my property. It was listed as a 4 bedroom, and I mistakenly assumed the basement was meeting Egress window code, however when I had the inspection I found out it was not. I am trying to figure out was is the best plan moving forward.
I got this property for what I feel was a pretty good deal. I have a 60 day post occupancy agreement, and I believe my offer was accepted over a higher one because of this. Waiting on the appraisal which should be completed in a few days, it will be interesting to see if they appraise it at a 3 or 4bdrm.
My current plan:
Increase final selling price by 2.5k and ask for 5k back in seller concessions. I am expecting this to cost around 7k for both windows, I want to make it seem like I am working with them and we are sharing the majority of the burden. Again, this was listed as a 4bdrm with no word of it being non-conforming. I am currently getting quotes and hope to include that in out message to the sellers.
What are you thoughts? I do not want this deal to go through, and I would still probably be willing to move forward if they matched my increase in price with an equal increase in seller concessions (so they they have no net loss) . That being said, I want to fight for it. In this market, I understand I am coming from a weak position.
1. Would it be possible to just install an egress in the basement bedroom, and leave the living room unchanged?
2. What are the implication of increasing seller concessions? Is an increase in 2.5k price with 2.5k seller concessions essentially nothing to them?
3. This is in the Denver area, I am expecting around 4k per window? Is this a good estimate? Builder recommendations appreciated!
4. Say I do not install egress windows and rent out the basement bedroom. If something happened, would I be covered under liability protection with my insurance.
5. What would you do in my situation?
Thanks!
--Posted this in General as well. New here, is that okay? Trying to get as much feedback as possible.--
I am not able to answer all your questions however in regards to renting a space without egress, aka not up to code the Tenant has rights to their rent back at any time and could take you to court. I would make sure it is a legal bedroom in case there is an issue and you have to contact you insurance company or you are reported for substandard to the current code.
I went through this in North Denver (Adams County). When we applied for the permit to add the egress windows the county wanted us to strip out the finish on the basement and bring everything to current code, since it was done in the 60s and they didn't have record of a permit. Check to see if the basement was permitted and all in order. If so, add the egress windows and move on - it will be worth it.
FWIW, it is fairly normal in Denver to have it listed as a 4 bedroom, and to indicate the non-conforming status in the comments.
I may be late on this. @Cameron Belknap. If you advertise the property as non conforming you should be covered. I would state in a lease that the bedrooms in the basement are non-confroming. I am not a lawyer so you should ask one.
In all my properties I put in Egress windows because it helps speed of sale. The quote's you received on the egress are right. They are about $4k each. Some times if you're doing multiple you can get a discount.
As for asking for sellers concessions, I would put it in the inspection report and and ask for a price reduction. The agent does have some responsibility for putting the fact in the listing. They mis-represented it and that is the agents issue. I would play a little hard ball, but look at the big picture! If this is a long term rental and you can add value by putting to egress windows in don't lose the deal.
Where is your agent??? He/she should be handling this for you. Did you not see that the windows were non-conforming when you walked through it??? If I was the listing agent, that is what I would tell you.
I doubt you'll see anything on the appraisal. Are you past your inspection objection window? How are you going to ask them to fix it?
I just did 2 windows for $4k total in Denver. PM me for my guys info, he's awesome.
Finally, why do you even need the window done? Are you really going to walk from a house over a few grand?
This is probably all resolved by now, but I'll add my two cents.
What do you mean exactly by "listed as"? Did they really misrepresent? Here's the thing- there are tons of listings on our local MLS that list all the bedrooms, conforming or not, in the main part of the listing. Then in the room details they mention "nonconforming", or perhaps in the description/notes. This may sound on the surface as if they are being shifty, but I don't think that's the case. I mean, if you'd seen this house listed as a 2 or 3 bedroom would you have gone to look at it? It probably wouldn't have even turned up in your mls search.
You can always ask for concessions of course, and you may as well try it.
Sounds like there is only one basement bedroom? Egress windows are only required in bedrooms, not living/family room areas.
You can of course rent it as a non-conforming 4th bdrm, or as a 3 bdrm with office, whatever. (believe MJ Barret's advice above would apply in CA but not here- these laws are state specific.)
But you will increase the value with an egress window plus you'll sleep better at night having done it.
I have been in a similar situation and wanted to give some advice.
1. Would it be possible to just install an egress in the basement bedroom, and leave the living room unchanged?
-> Yes, only the bedrooms require the egress window.
2. What are the implication of increasing seller concessions? Is an increase in 2.5k price with 2.5k seller concessions essentially nothing to them?
-> First, if you can get an egress window put in for only $2,500 then congrats. It will likely be closer to $4,000 unless you're digging yourself. Second, you can always ask. I don't think the seller would cancel the contract over it. I know in the Denver market, as a seller, I would not concede on this. I know they didn't put non-conforming in the description but a simple walkthrough and photos show that the windows are non-egress.
3. This is in the Denver area, I am expecting around 4k per window? Is this a good estimate? Builder recommendations appreciated!
- >That sounds about right. I have quotes from $4,000 to $5,000 but never had them installed.
4. Say I do not install egress windows and rent out the basement bedroom. If something happened, would I be covered under liability protection with my insurance.
-> I believe so but you should ask your insurance agent to walk you through this. In our situation, we had 2 doors to exit the basement unit. We took the door off and called it a studio, thus didn't have to install an egress because there was an exit door from the living room area.
5. What would you do in my situation?
-> I would try to get a little bit of money back from the sellers and install an egress window. It will help with liability, makes the unit more attractive with natural light, and will make your property more desirable when you sell. If the sellers decline to do anything about the egress window, just buy it anyway. It's Denver, this market is crazy, and if $2,500 stops you from making the investment then it's probably not great to begin with.
@Cameron Belknap FHA loan rules in HUD 4000.1 mention not counting the basement as part of the Gross Living Area; however, part of the FHA requirements found in HUD 4000.1 includes a section on "converted spaces" which states:
“The Appraiser must treat room additions and garage conversions as part of the GLA of the dwelling, provided that the addition or conversion space…is accessible from the interior of the main dwelling in a functional manner; has a permanent and sufficient heat source… and was built in keeping with the design, appeal, and quality of construction of the main dwelling.”
Furthermore,
“The Appraiser must analyze and report differences in functional utility when selecting comparable properties of similar total GLA that do not include converted living space. If the Appraiser chooses to include converted living spaces as GLA, the Appraiser must include an explanation detailing the composition of the GLA reported for the comparable sales, functional utility of the subject and comparable properties, and market reaction.”
I am a layman on this matter, nonetheless this is my interpretation: Unless this "4th Bedroom" has a permanent heat source, is completely finished out according to spec with the house, and comparable to neighboring properties with finished basements, then there is a good chance it will not appraise. This is especially true given the discretion to count it as GLA is largely up to the appraiser who may choose to appraise conservatively.
FWIW it sounds like the listing agent dropped the ball by not indicating that it is non-confirming. You may wish to use your option period to get a few quotes on the egress window and talk to pros who have done retrofits in the area to gauge potential permitting office difficulties.
It’s not a bedroom with out and egress