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How Much Value Does a Finished Basement Add to Your Home?

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How Much Value Does a Finished Basement Add to Your Home?

In Basement Remodeling by Joe Ellis / Updated: August 10, 2021

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Whether you are considering selling right now or within the next five to ten years, the decision to finish your basement is a huge one with lots of factors to consider. Two of the main factors to consider are the cost and return on investment (ROI). When looking into homes to buy or sell, each penny you invest into your property should yield some form of ROI in either the present or the future.

What is considered a “Finished Basement”?

Before we get into the benefits of having a finished basement, let’s break down some definitions. If you are one of our Michigan homeowners, more than likely you have what is considered an unfinished basement. This is a space carved out under your home with concrete slab flooring, minimal lighting, and either no walls or heavily dilapidated walls. These spaces were originally intended for temporary storage, but as time progressed so did people’s needs. Also, over time these options for storage were not as convenient due to the conditions of the basements.

A finished basement is a significant upgrade from this. It includes walls and appropriate flooring. The space is usually wired for electricity and plumbed depending on what the space is being used for. The walls are insulated and designed to look more similar to the rest of the home. The floors are not just a concrete slab but legitimate flooring. The dark, humid space is now gone. It is now replaced with a livable space.

The Return on Investment for Finished Basements

When looking at your ROI for your soon-to-be finished basement, you have to remember that most of the value of your home is going to be assessed by all of your space above ground. These are considered your above-grade (above ground) living spaces. This includes your living room, kitchen, bathrooms, and bedrooms. When it comes to your finished basement, you are going to receive an ROI, but it won’t be quite the same.

Your immediate ROI will be about 70% of your investment. However, that is purely the immediate monetary ROI of your investment if you are trying to sell your home. The way you make adjustments for the remaining 30% will come over time after finishing your basement.

How a Finished Basement Adds Value to Your Home

As stated, finishing your basement has some immediate ROI when it comes to adding value to your home. In comparison to the renovation of a room in your home above ground, it is about 70% of that. The remaining return on your investment lies within the day-to-day benefits of having a finished basement.

  1. More living space: You now have an additional curated space to do whatever you want with. You can have your own climate-controlled storage as originally intended, or you can turn this space into a theater room, a sports room, a guest suite with a bathroom. The possibilities are endless with this new finished space.
  2. Energy Efficient: Before finishing your basement, this space was in a constant state of loss. In the summers, you may have noticed that your home was harder to cool. In the winters, it seemed like your home was harder to heat and always had a draft. This is due to the lack of insulation in the walls and flooring of your unfinished basement. Once you finish it, you are now able to heat and cool your home with no problems resulting in a lower energy bill. This is also a great selling point!
  3. Health conscious: One common feature of a Michigan basement is HUMIDITY. In fact, humidity is the reason why a lot of insulation and flooring will not work in your basement. The humidity gets absorbed  into the materials. For insulation, this means that it won’t work and your time and money will be wasted. For your flooring, the materials will swell resulting in buckling and warping. It also gets worse. The dark, humid spaces are great environments for bacteria, molds, and mildews. This will not only cause some pretty terrible smells, but it could also result in health concerns or an increase in health concerns. Indoor allergies are commonly caused by dust, mold, and mildew in the home. Finishing your basement properly could reduce these risks and eliminate some serious health problems.

Investments to Maximize Your Finished Basement ROI

Investing in finishing your basement can be costly, but as stated before there is a return on that investment so depending on your goals, it could very well be worth it. If you are looking to sell your property, the energy efficient and health conscious results are already a huge selling point for your property if you finish your basement. However, if you are looking to maximize your ROI, here are some tips to help with that.

  1. Flooring: Due to the humidity commonly found in basements, hardwood flooring is not a possibility. However, you are definitely free to upgrade the quality of tiled or carpeting within your basement. At Finished Basements Plus, we have options for vinyl tile and carpeting that would fit your home perfectly.
  2. Ceiling: The rules for architecture and design are especially applicable for your basement. Higher ceilings mean more space. So having a traditional enclosed ceiling may not be the best option for you. They’re are some options that allow you to have more vaulted and exposed-appearing ceilings without exposing your electrical wiring.
  3. Bathrooms: If you are interested in creating any sort of living space within your basement, it would be highly inconvenient to have to walk up stairs every time you have to use the restroom. A great investment that would allow for another layer of luxury and a great selling point is a downstairs bathroom. It is great for convenience and if you would like to create a guest suite to be used for family members, it is a must-have asset.
  4. Entrances: One consideration that may be possible for you is to include a walk-out entrance to your home. This may require some expansion and additional digging, but it could mean huge advancements for your space. Basements are known for having persistent dim lighting due to the lack of windows and spaces for sunlight to come in. Some basements are constructed or expanded to allow for full sized doors. This is especially helpful if your home is build on a sloped property. If this is not possible, experimentations with different types of lighting could be a great option as well.

In conclusion, while the immediate return on investment may not be the most lucrative, there are numerous benefits to finishing your basement that will not only add value to a potential buyer but will also add value to you as the homeowner. Finishing your basement is one of the best decisions you could make as a homeowner regardless of if or when you are intending to sell. Contact Finished Basements Plus TODAY to speak with one of our consultants on how to start the process!


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