Whatever is legal should be how it's listed. So I believe it should be listed as a 2, but with wording in the description that there is a finished room that could be a third.

If the addition was not permitted and a DIY scenario, it brings up the potential for unsafe living conditions. I went to a listing appointment with the reported county records square feet and was met with a similar scenario, where they had added onto the house without permits. I did not get the listing because they insisted on using their 'new' square footage. Besides, if they are smudging with the county, what else will they do during the course of the sale?

This is a great question. I've always advertised the as-is vs. the tax records, but heavily cautioned in the advertising about the un-permitted sq.ft.

(Except for converted garages, since that is straight up a health & safety issue. I do not include garages or closed in porches as rooms, just "bonus finished areas with permits unknown".

I have a 2/1 coming up that walks a 3/2. This one I've reached out to my broker for advice on since it's more than a bonus room, it involves much more.

I would advertise it as a 2/2 with a mention of the 3rd bedroom. 

I think I would advertise it as a 3/2 with the information disclosed.

Richie, I don't know how this plays out in other parts of the country, but I had this situation a few years ago and here's how it went. I went on a listing appointment and noticed the basement in the house was finished. I asked the homeowner if it had been permitted. He said no, and I responded, it would not have passed on the electrical side. That day, I had to pick up a permit from the local county inspections office so I asked the permit tech about liability in a case like that. She said, the liability passes on to the buyer when the house is sold. After that, I called my insurance agent and asked a similar question. I wanted to know what happens if the work causes a fire. She said the insurance company would pay to rebuild. I was a little shocked considering it was done without permits. Her response was they have to assume it was done by professionals whether permitted or not. That's a real stretch considering what I've seen over the years. In both cases, there was no liability on the agent. As far as how it's listed, our MLS populates the tax side of the listing automatically. I wouldn't override that.

We would not advertise unpermitted anything.  Why would you put your seller in a bad position...What is IS!

True picture in advertising! COE 12. I would look into getting an as-built permit for the unpermitted room. Whether the seller intends to do it or not. The buyer would at least know what they could do. And yes it all gets disclosed in the marketing 'somewhere'.
That's a skills metric. I've seen agents call a bathroom in a garage a freaking Casita.

Will there be insurance issues with the un-permitted room?   Where did the 3rd bedroom come from?  Was it added interior walls, or is there new wiring, new plumbing, new exterior walls, new roofline?

Talk with a property appraiser, then take his/her opinion to a real estate attorney.

Go with your gut.  I am not a permit police.  Fully disclose if asked.  Again. I hate to say this but buyer beware.  It looks like a 3/2 to me.  

Advertise 3/2, CASH Only. Bedrooms are easy, no plumbing and typical house wiring and wall board. So easy a Caveman could do it.
For financed buyers,the price remains the same but I can make the 3rd bedroom disappear after receiving non-refundable advance.
Of course the text description would be written clearly.
Now, what websites does the consumer have access to that DOES NOT use the agent entered discription but replaces it with AI generated text?
Here in Florida, it is NOT permitable to develop the lowest level (garage level) of a house becuase current houses are build with blow away flood walls so the house survives the storm surge.  90% of these houses have fitness centers, entertaining centers, game room complete with kitchens on the lowest level. The 10% are city leaders, HOA president and those in public positions who can't be caught asserting what others may call their athoratitive priveledge.

Advertise a a 2/2 with a finished basement.

We call it as it is, so far that has always matched up with what the assessor has in their report.  We are not permit police so that is not part of our search, though I suspect the assessors do check this.

I tell it the way it is.  It is a 3/2 and disclose that the third bedroom was added without a permit. 

So many agents do not READ the details in the MLS or the PRIVATE remarks that tell more of the story.  That is on them. The information is there. 

I also include this in my AVID.  Cover the backside and disclose. Disclose. Disclose. 

I'd go 2/2 with a bonus that could be used as 3rd. 

I would not like passing on a problem that the seller caused to the buyer. Disclosure is supposed to stop crap like this.

If it's not "legal", it doesn't exitst as a bedroom; can advertise as office, for example, or den.

I have seen a situation as you have described many times. Whether it is a un-permitted addition or un-permitted garage conversion. The house is presented as-is, in its current configuration and size and usefulness. The mls usually includes a notation that the changes are permitted, un-permitted or permit unknown. If not shown in the agent comments section, such information is included in disclosures.

It is up to the buyer, advised by their agent, as to whether a purchase of a property with un-permitted work, additions, conversions, etc., is something they would elect to do.

We don't have the strict permitting, even for basements in Denver.   One City does require a permit, but not any others.

This is a good reminder to share.

I have seen agents explain the additional "bedroom" and permitting situation in the agents comments.  However, that is not seen by the general public.  So it ropes them and, depending on what they are told, will have consequences down the road.  Will the appraiser take the unpermitted room into consideration?  What about resale value?  As a broker, I don't like gray areas and will go with the tax assessor's square footage then talk about "bonus rooms".  

In the county where I live there is no difference in a two bedroom and three bedroom septic requirement and permits are not required if cost is below a certain amount so we have lots of unpermitted add ons that don't cause a problem.  closet and window make it bedroom and as long as septic is in complicance you are good here.

It's rare that it's a problem here. Some just call it " non-conforming" or something similar. Most aren't worried about permit, and if inspector doesn't find anything wrong with it, they figure it's not worth worrying about permits. it's a 3rd bedroom whether they got a permit or not. It is possible to divide a room to create a 3rd bedroom and no permit is needed. If it's on well and septic, I'd be more concerned whether the drain field was approved for 2 bdr or 3.

We can advertise it a 3 bedroom as long as we disclose it isn't permitted. No permits aren't considered "illegal" here. It is a matter of disclosing. We most commonly see decks not permitted then finished bonus rooms or 3rd bedroom. It isn't common to see an actual addition to a house that wasn't permitted. It is usually unfinished space that was finished later. In a good market like we're in, it isn't a big deal. In a tough market like the recession, it is a big deal. Our county also doesn't come after you for back taxes. At least for now.