Your slab-of-concrete basement serves no real purpose but to collect dust and cobwebs, or for storing things you never use. You dream of making it into a bright, cozy, and comfortable space that you can use for just about anything.
With so much room to work with, this blank canvas practically oozes potential, and presumably money, too, when it comes time to sell your home. But how much value does a finished basement add to a house?
Contrary to popular belief, you can’t count your finished basement square footage like you would a room addition upstairs, but you might opt to finish it for other reasons. But let’s cut to the chase. Based on available data, for about every $1,000 you put into a basement refinish, you can expect to get back about $700.
According to Remodeling Magazine, which has been offering returns data on popular home improvement projects since 2002, a midrange basement refinish will recoup 70 percent of what you spend. This assumes your basement finish includes exterior wall insulation, painted drywall for walls and the ceiling, painted trim, and tile floors, as well as a bar, bathroom, a main area, and perhaps a bedroom.
A home with a finished basement will be appraised for more than a home without, but based on the style of your basement, the value added will vary. As a general rule, the deeper your basement is below grade, the less the added square footage will appraise for. If your appraiser is going by Fannie Mae’s rule book, they won’t include your basement in the total square footage at all.
Most finished basements will fall into one of the following categories:
Full basement or usable lower-level space. A full basement has ceilings tall enough for someone to comfortably stand up in and are often as large as the footprint of the home. Sometimes called usable lower-level space, these basements don’t have access to the outside unless through a set of stairs to ground level.
English basement or walkout basement. An English basement is either all or partially above ground and has a point of exit in the front, or more commonly in the back, so you can literally “walk out” of these spaces. These basements are often more valuable per square foot since there is a point of egress.
A basement remodel is often less expensive than an above-ground house addition, creating in a practical sense, usable (heated) square footage for a real bargain. The average cost of a finished basement is between $5,100 and $8,750 nationwide, whereas the addition of an above-ground room can cost from $10,000 to $80,000 or more. However, no matter the condition or level below ground, the finished basement space will never equate to the same value as the above-ground living space in the eyes of an appraiser.
The value at which an appraiser calculates your below-grade space will depend on a few factors, including its access to the outside, or lack thereof, the total number of windows, the quality of finishes, and more. In addition, appraisers will use comparables in your area to ballpark the value of your basement and property overall. To complicate things further, appraisers and definitions of basements can also vary by location.