Unpermitted Room Addition in Arizona

[Daniel Lehrman]

Hi BP Community,

I'm under contract for a home in Tempe, Arizona.  It's a home with a room addition that I plan to househack with Airbnb.  Given the crazy demand in this area, I submitted an offer without appraisal or inspection contingencies to win the contract.  

I recently learned that the room addition was not permitted and thus was not included in the square footage, which resulted in an appraisal far below the contract price.  Listing agent did not disclose in writing that room addition was not permitted until after offer was accepted without appraisal contingencies.  In seller disclosure, seller claimed that the room addition did NOT require permits because the work done was “cosmetic”, even though there were structural renovations, plumbing, electrical, etc that the seller admitted to overseeing.

Do I have the right to demand a cure even though I waived my appraisal contingency?   What would be fair?  

I'm sure the sellers and listing agent would want to avoid potential legal action for material misrepresentation.  What do you think? 

Thanks!!