First, not all lenders discount unpermitted areas. We just had an appraiser add in a value that was about 25% of normal price per sq ft for a finished basement.
With regards to potential consequences on work not done with permits they are generally as follows:
1. When going to resell the house, buyers may discount the area done without permits, and if you know it to be true you need to disclose it.
2. If the city becomes aware that you have unwarranted space - this could happen in a number of ways, but most likely it will be because you do other work or a neighbor calls the city - you will likely either be required to file a retroactive permit, do some work to bring to current code, or worst case undo the work.
If you are going to buy a home that has unwarranted work I would either make sure the price is discounted accordingly or have them get it inspected. The latter will make your offer much less attractive - talk with your agent/broker.
Lance King/Owner-Managing Broker