Somewhere between a third and a half of the older San Diego houses we look at have something that was done without a permit — a garage converted to a bedroom in the eighties, a patio enclosed into a family room, a second unit in the back, a water heater relocated, an electrical panel that predates the paperwork. Add in active code enforcement cases, expired permits that were never finaled, and recorded municipal liens, and you have the single most common reason a San Diego listing falls apart in escrow.
You can sell the property exactly as it stands. California requires you to disclose what you know — it does not require you to fix it first.
This is the mechanic worth understanding, because it explains the price gap. When a retail buyer's lender orders an appraisal, the appraiser is required to exclude unpermitted square footage from the value. A house marketed as 4 bed / 2,100 sq ft can come back appraised as 3 bed / 1,600 sq ft, the loan shrinks, and the buyer either has to bring tens of thousands of extra dollars or walk. Most walk — after your house has been off the market for three weeks and the failed escrow is now something you have to explain to the next buyer.
A cash buyer has no appraiser and no underwriter. They price the cure cost into the offer and take the risk themselves.
Everything you know, even if it's vague. What was built, roughly when, whether permits were pulled, whether the city has contacted you, and whether anything has been recorded against the property. Surprises found in escrow cost far more than problems disclosed at the start — and in our experience the disclosure almost never changes whether a deal happens, only the number.
Unpermitted second units usually come with tenants — see selling a rental with tenants in place. Inherited houses are the other big source of decades-old unpermitted work: selling an inherited house fast. And if the condition problem is contents rather than construction, see selling a hoarder house.
Yes. California requires disclosure, not correction. You must tell the buyer what you know on the Transfer Disclosure Statement — including additions, conversions, or repairs done without permits — but you are not required to legalize or remove anything before you sell. Concealing it is the actual legal risk; disclosing it is routine.
Code enforcement cases attach to the property, not the person, so the case and any accruing civil penalties transfer with title. Cash buyers price this in and take it on. If the city has recorded a lien, escrow handles the payoff or the buyer negotiates it, and the amount is accounted for in the offer.
Frequently not. Appraisers are instructed to exclude unpermitted living area from the appraised value, which can leave a financed buyer short and kill the deal after two weeks in escrow. A cash purchase has no appraisal and no lender, which is why unpermitted properties sell to cash buyers far more often than to retail ones.
Honestly, it depends on the cost to cure. A garage conversion that needs to be legalized or reverted is a $20,000–$60,000 problem; an expired permit that just needs a final inspection may be a few thousand. What a cash buyer prices in is the cost plus the risk and the delay — and you should compare that number against what it would cost you in time and money to fix it yourself before listing.
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