Learn how finishing a basement can add value to your home, including types of basements, return on investment, and how appraisers evaluate finished spaces.
Your concrete slab basement isn’t doing much other than collecting dust and cobwebs. You’d love to remake the space into a more functional and stylish addition to your home.
But how much value does a finished basement add to a house?
A finished basement adds value to your home—just not in the way you think. Here’s everything you need to know about how much value a finished basement adds to your home.
Deciding to finish your basement depends largely on your lifestyle, then on market trends, and lastly on what you hope to get out of the space. If you value entertainment and additional living space, finishing a basement is a strong choice.
You can expect $700 back for every $1000 you send on your remodel. Now the 30% you don’t make back in cash value is likely made up in functional value and what you gain by building a custom space for your lifestyle.
To make an informed decision on whether or not to invest in a basement remodel, it’s important to understand the types of basement renovations. The type you choose will largely depend on your home’s existing structure and how big your budget is.
A walk-out basement is the most popular with buyers because of the natural light it offers and the fact that most appraisers will count the walk-out basement as above-grade space (meaning they will count the basement in the square footage of the home).
Since it’s more like a ground floor—thanks to a property slope of at least 6 feet from front to back—it allows for larger windows and plenty of sunlight, both of which appeal to buyers.
Shockingly, a standard lot basement is the, well, standard basement style—a fully underground, concrete wall, concrete floor basement that has minimal natural light. This setup elevates the main level a few feet above the ground, requiring steps down to the backyard.
Due to the limited natural light, a standard lot basement tends to be less appealing to buyers during resale.
A garden-level lot basement strikes a balance between a standard lot and a walk-out basement. Thanks to a gently sloping lot, part of the basement sits above ground while the rest remains below.
This design has a mix of full-sized windows and smaller window wells, though it typically lacks direct access to the backyard. It offers more natural light than a standard lot basement, while still maintaining some of the cozy, tucked-away charm.
It’s important to remember that you won’t recoup every penny you invest on a basement remodel. Plan your basement around elements you know you will enjoy and not so much on the ROI you may or may not get later.
Also, remember that finished basements are a big draw for many buyers. In a competitive market, a well-done basement will set your home apart from others, especially if your competitors have similar homes sans the finished basement.
Let’s get a better lay of the land regarding the return on investment of finished basements.
Several factors can impact just how much value a finished basement adds to your home. Here are some of the big ones:
A well-designed basement with high-quality finishes can make a huge difference in value. The layout, lighting, flooring, and fixtures all play a role in creating a space that looks polished and inviting.
Make sure your basement meets local building codes. It affects safety, insurance, and ultimately, resale value. Buyers appreciate knowing that the space is safe, up-to-date, and officially approved.
Your local market influences how much value a finished basement adds. In cities there where space is a premium, a finished basement is the jackpot. In suburban areas a finished basement appeals to families looking for extra space.
If you’re getting ready to sell your home, you’re probably assessing if finishing your basement will help you with resale and marketing your home rather than thinking about your personal enjoyment of the space.
If that’s the case, it’s essential to understand how home basements are appraised. To understand how appraisers calculate value in the basement you’ll need to understand these three terms:
This refers to living spaces that are above ground level. Basically, any room not in the basement.
These are rooms located in the basement or underground.
The total area of finished, above-grade living space. This doesn’t include your basement, no matter how stylish or functional it is.
Here’s the deal: Appraisers will typically value above-grade spaces more highly than below-grade. If your local price per square foot is $150, you can expect the basement to be valued at around $75 per square foot, since it’s considered below-grade.
Appraisers also use comparables (comps) — recently sold homes in your area with similar features. They’ll make sure to compare your home with homes that have similar above-grade square footage, not ones with dramatically more above-ground space.
Clearly, you need to be strategic about finishing your basement—both from a practical how can I get resale value from this space and a functional what do you want out of this space? Here are a few insider tips on how to maximize your basement remodel.
Before starting your basement project, check with your local jurisdiction to determine what permits are required.
When finishing your basement, consider your needs—whether it’s a guest bedroom, extra living space, or playroom. For resale, choose features that align with what buyers are looking for in your market.
Buyers often prefer open floor plans, but be mindful of load-bearing walls and systems like water heaters. Consult your contractor to ensure your layout is functional and feasible for the space.
Building codes usually require 7-foot ceilings, but higher ceilings are ideal for basements. Talk to your contractor about how to optimize ceiling height, especially around pipes and ductwork.
Maximize natural light by creating a walk-out basement, or add plenty of lighting to standard basements. Recessed lighting is a great option for brightening the space without sacrificing ceiling height.
Avoid hardwood floors in basements due to moisture concerns. Opt for carpet, carpet tiles, or vinyl, depending on your climate, to keep the space cozy and functional.
Yes, finishing your basement can increase your home’s value. It adds usable living space, which is highly appealing to buyers. The return on investment varies, but a finished basement typically boosts home value by up to 70-75% of the cost of the renovation.
Finishing a basement before selling is worth it if there is a strong buyers’ market that demands the extra space. Homes with finished basements sell faster and at higher prices, but calculate the costs versus the potential return on investment based on your area.
To calculate the value of your finished basement, appraisers consider its square footage and how it compares to above-grade living spaces. Below-grade areas like basements are valued at about 50-75% of the price per square foot of above-grade spaces, depending on the quality and finish.
A finished basement generally doesn’t count as part of the home’s official square footage in listings. Appraisers classify it as below-grade space, but it does add significant value and usable living area to your home.
If you’re ready to remodel your basement and add additional value to your home, Finished Basements Plus is the perfect team to bring your vision to life. Contact us today for a free consultation and let’s get started on your dream basement!
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