Adding an additional room

[Koob Moua]

Question for the pros. So I’m under contract for this property at 106k and has foundation issues and the property will probably appraise for 160-180k. But also the seller says that the house is a 5 bed and county tax records says it’s 3/2. I was thinking on adding a 4th room without adding sqft just to the existing sqft of 1500. The problem is I believe if I get the bedroom permits they will probably have me demolish what wasn’t in the records if I wanted to add additional rooms. But now I’m guessing I might of offered to high of a price. Do you guys think I should just terminate the contract, and lose out on my earnest money than lose out on more money?