I agree with my colleagues here.
Regarding lenders: Only the permitted square footage and rooms would count towards the appraisal value of the property. So the third bedroom and second bathroom would not count towards the appraisal value decreasing the value of your property and perhaps the eventual sales price, if the buyer is not willing to pay the difference. I have even seen a lender hold up escrow and force the seller to obtain the correct permits in order to move forward. Certainly, this kind of property would not be up to FHA guidelines. Please check with some lenders to see what the current guidelines are.
Regarding the building department/permits: A neighbor could report that you have unpermitted rooms, and the city could force you to obtain the proper permit and restore the structure to its original permitted state. This could also happen, if the city were to inspect your property independently. From there, if you would like to obtain permits to add a bedroom and bathroom, there would be additional expenses for that.
Every city has its own procedures, and you should check carefully with the planning/building/permits department to obtain detailed instructions regarding how to proceed. Your licensed contractors will be able to help with these matters as well.
Please contact me for more information. I can help you.
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Appraisal will give you credit for the portion of the home that is permitted.
Any work that is done that adjusts square footage, makes changes to plumbing, electrical, etc. needs to be permitted or it will not be utilzed by the appraiser for value.
This may be fine for a cash buyer, but resale value will definitely be effected.
Any future buyers who so desire to purchase home will need to have permits to justify value.
Another thought, work bay 'look professional' but concerns arise with electrical and plumbing work done to code.
If you are thinking of selling this property, I would either request permits (which you likely will not get) or find another property,
If you can get them inspected and pass then it will make selling much easier and possibly gain more money.