2 BR/1 BA with unpermitted garage conversion

[Michael Robinson]

I viewed a Houston, TX area listing for a 2 bedroom/1 bath recently and discovered that the house is actually a 3 bedroom due to a converted garage that was most likely done without permitting.  I assume they wished to hide the conversion because there is a dummy garage door at the front of the house.  The agent listed as 2 bedrooms only per appraisal district record.

I am not sure whether I wish to flip or rent this house, but I am leaning toward using it as a rental for a few years and selling later.

Should my offer be accepted, my gut says that I should convert the "bedroom" back to a garage and rent/flip as a 2 bedroom. 

I am interested to know if others would do the same.  Also, should I get some leverage in negotiating with the seller due to the fact that the improvement is most likely unpermitted?