I sell a lot of older homes in Portland's close in neighborhoods. Many of these houses have had various increments of work done over time. When a house was built, it may have had stairs to an unfinished attic, used for storage or maybe as a sewing room.
Over time, subsequent owners may have added wall board, a few outlets, and maybe gotten some heat up there. Perhaps another owner added some insulation, and decided it was reasonable to use the space as a bedroom.
In some cases, someone added a half bath; no big deal, just to avoid going downstairs in the middle of the night. And then another owner added a shower to that half bath.
While not all of a sudden, it was actually over decades, the unfinished attic became a finished attic with bedroom and bath. Or is it?
Over the same decades, buyers have gotten pickier about wanting permitted work, municipalities have become more sophisticated about the permitting process and permit records, and insurance companies may have gotten stricter about paying claims in unpermitted spaces.
How is a buyer to know? In the City of Portland, many permits are on portlandmaps.com, but not all. Other jurisdictions also have pretty good portals for checking permits; Clackamas County , Washington County It is best though, for the buyer to go to the permit office and ask to see the records. Checking the usage or property description in municipal databases can also be informative. Is the house considered a one story with attic? With finished attic? What is the ceiling height like in the attic? Are the stairs crazy steep and narrow?
Many of our building codes have to do with fire and earthquake safety. The city isn't just being picky when requiring a decent stairs way. Can people safely get up or down? Are there sturdy handrails? Could a fireman, with full gear, get up the stairs and maneuver in the attic? When the space was "finished' was the proper fire blocking done to prevent the spread of fire?
Why should a buyer care? I'd prioritize safety concerns first. Questionably finished space is probably best not used as sleeping quarters; when we are most vulnerable. Next, I wouldn't spend money on pretty, fancy finishes in unpermitted space as buyers won't value it to its fullest. If future building permits come into play, the unofficial finished space may need to be brought into compliance. And, some buyers may not even consider buying a house with questionable, or unpermitted space. Perhaps you plan to stay in the house forever, and are only using that upstairs for storage, and the occasional hobby project. Maybe its okay to leave it as is?
And then there are appraisals, as completed for the loan process. While appraisers may not (or may) want to see building permits, they may enlist a set of criteria for considering a room a bedroom, or finished space. Appraisals do use square footage calculations, so this can matter. Maybe the buyer and seller agree on a price, even if that attic is funky. The appraiser may not be willing to include that space in their consideration of value, resulting in a low appraisal.
The City of Portland has a pretty good piece on converting attics and basements to finished space.
My advice; if you are considering finishing an attic or basement, do so with building permits from the municipality with jurisdiction. If you have a semi-finished basement or attic, don't over improve it until you know if it is considered "legitimate" space. Consider going back,and getting previously finished spaces permitted. Buyers are getting pickier on this. Addressing these issues before putting your home on the market will give you time to do the right thing, make decent decisions an be far less stressful