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Finished Basement Appraisal Questions

We recently purchased a 3 bed, 1.5 bath home that is 1191 sq. ft. in Wellesley Massachusetts, an area known for being expensive and sought after. Houses in our price range go quick, as most cost more, and space is very limited (2500 people per sq. mile). We paid $436/sq. ft, and we have an unfinished basement with direct access and 8 ft. high ceilings that is approximately 550 sq. ft.

We're thinking of finishing the basement with an entertainment room, laundry room, and possible office/workout gym. However, I'm wondering a few things and would love to know everyone's advice:

- What % of the price per square foot can you generally expect to get back on a well finished basement?
- What is needed to have the square footage included in MLS listings? We currently have a separate door that directly accesses the basement, but there are 6 steps down.
- Likewise, would adding a full bathroom bump our MLS listing to a 3 bed 2.5 bath?
- What is typically most desirable in a finished basement? Office, bedroom, bathroom, etc.?

Any help is much appreciated, I've read through a few similar responses and I'm eager to get advice from the community.

-Kevin
  • May 20 2013 - Wellesley
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Answers (7)

I would generally advise against doing any work just for the purpose of bumping the value of the home... depending on the market at the time of sale, the home may or may not gain in value because of a finished basement.

Things to do:

Test for radon and install a mitigation system if the results are above 4.0. Google Accustar Labs and order one of their kits or hire a local radon specialist to test.

If you're adding a bedroom downstairs, add a full bath. Otherwise, 1/2 bath is fine.

A good dehumidifier can go a long way. if there are any water issues, a french drain or another dry basement solution will be a good investment

Put in a floor that isn't likely to hold moisture (carpet = bad. Tile or engineered wood = better).

Play area/family room/guest bedroom = all are attractive extra space solutions in a home.

Good luck! 

  • May 20 2013
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Rate of return can vary, depending on the area that house is located in, what conforms to the other houses in the area, ceiling-height, the number of partition walls, the quality of the craftsmanship, etc.

I've seen it estimated that finished-basement space can be worth anywhere from 1/4 to 1/2 of the investment. But, again, there is no set answer.

Since the finished-space is below-grade, it generally shouldn't be considered "liveable space," and bedrooms in the basement shouldn't be listed as bedrooms on an MLS listing.

If you still want the finished-basement information to be included in an MLS listing, it can be entered into the "Living Area Disclosures" section of the MLS listing.

As for what's "desirable" in a finished-basement, it depends on who's going to be living in the house. Some people need an extra play-room for the kids, or an office, a game-room, exercise room, etc. In my opinion, a bathroom can make the space more convenient to use, especially if the closest other bathroom is all the way upstairs and across the house.

It couldn't hurt to call a licensed appraiser and ask for his or her opinion, as well.

I'm a Realtor in the area, and I see varying answers all the time.
  • May 20 2013
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Profile picture for Nevermind22
Thanks Philip,

This is very helpful. When you say 1/4 to 1/2 of the investment, is that above and beyond the price you spend to finish the space?

For example, if we invested $20k in finishing the basement we that potentially increase the value of our house $5-10k or $25-$30k?

This is really useful, I think we'll most likely contact an appraiser to figure out the best option.
  • May 25 2013
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No problem. When I referenced the 1/4 to 1/2, I meant take the amount invested, and you might see an addition of home value equal to 1/4 to 1/2 of that investment dollar amount. But, then again, depending on your house, moisture level of basement, type of room, neighborhood comps and many other factors, it might not be worth it if you are just looking to increase the value of your home in order to sell. You will probably never see a 100% return or more on a finished basement investment. You will end up investing a certain amount, and since it will add less value to your home than the actual cost of investment, it's actually a loss. I would only finish a basement for my own use and enjoyment. If you want to bump your home value or sell your house quicker, increase the curb appeal of your house. New paint or siding, new energy efficient windows, new front door, new garage doors if they face the street, clean up the yard, etc. Also, remember this: just because you put a certain amount of money into your basement, and just because you might find a buyer who sees worth in it and is willing to pay the extra money for it, doesn't mean that their lender will see it the same way. If the lender's appraiser comes out and doesn't see the same value in the basement, the bank might not let that buyer borrow the money to cover the extra money that you're asking for because of your finished basement. That could be a problem, so I would call an appraiser for some advice.
  • May 25 2013
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Profile picture for Nevermind22
Wow, I'm surprised, but definitely grateful for the advice. We'll focus more on curb appeal updates instead. 

That's a great point about the lender approving the mortgage, I didn't even think about that.

Thank's again Philip
  • May 25 2013
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You're welcome. Good luck with the house. I[deleted by ZIllow moderator. Please see our Good Neighbor Policy for posting guidelines]
  • May 25 2013
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Profile picture for Patrick johnson
OK..have a lot to cover on your question. First the $ per square foot is helpful but it includes the value of the land. And for most expensive areas the value of the land is much more than the home. If you page $450k for the home you could assume that the property is worth $300k and the house $150 or about $150 a square foot. While an interesting number (if correct) it doesnt answer your fundamental question. finishing the basement sounds like a great idea. what your house needs has a lot ot do with your neighborhood. What do other homes have that yours doesnt? an obvious one is the 1.5 bathrooms. I think adding a full bath would make your hom emore desireable and be a "good investment" I would certainly talk with the real estate agent you bought the house from to see what they would suggest. Most desireable in a basement has to do with access and what your home needs. an entertainment room is a good idea, another bathroom is a very good idea, laundry room is also good...but depends on what you have now. I got an estimate for finishig a 500sfft basement for $15,000 to $18,000 exluding the bathroom/laundry from the website http://www.remodelormove.com/finish-a-basement. Also site gave me a detailed breakdown on the estimated cost for labor and materials 
  • November 29 2013
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