When customers are looking to remodel their basement, one of the main questions we hear is “how much value will this add to my home?” It’s normal for homeowners to look at how much it’s going to cost and draw equal comparables, but the valuation process is a little more tricky than that. So what do you need to know about value as a homeowner? Below we unpack the value of a basement remodel in a number of different contexts and invite you to explore what fits your personal situation.
Remodeling To Sell
Value and Appraisals
Above Grade VS Below Grade Remodels
The first thing you need to know when understanding how a basement remodel can affect your home value is that square footage in the basement does not hold the same value as comparable square footage in an above-grade living space. The deeper down you go, the less value the space has. It’s therefore common for the value of basement space to range between 50-70% of above-grade value.
When assessing the value of your home, appraisers consider above-grade square footage first and then add basement square footage afterward. With all this considered, this means that if your home is the only one in the neighborhood that has a significantly finished space in the basement, you won’t be valued out at the same price as your neighbors’ above-grade space, regardless of being in the same neighborhood or having similar overall square footage. To sum up, while adding livable space in your basement will definitely increase your home value, it’s important to remember that space above-ground is worth more than space below ground.
Estimate and Cost VS ROI
It’s common for customers to assume the cost of the remodel will equal the value that’s added to their home. Our blog The Top 3 Basement Remodeling Projects goes into detail about the cost and process of adding a bedroom, a bathroom, or a wet-bar/kitchenette, so we won’t go into pricing too much here. What we will say is that the estimate your contractors give you will not directly equate to the value added to your home. It will, however, add a substantial sum. According to HomeAdvisor, the average basement remodel project can have up to a 70% return on investment and this rings true across the country.
There are, however, some ways you can increase the ROI. Here are a few top tips for getting the most out of your remodel…
- Don’t waste time, money, and resources trying to complete the project yourself only to realize your project isn’t up to code. Many basement remodels require permits to add additional living space to your home, and basements also need to meet code regulations (such as a minimum ceiling height) to pass inspection. This is why we will always recommend using a licensed, experienced professional.
- The type of space you create is important. Something made for general use typically adds more value than something custom or less adaptable.
- As we discussed, above-grade square footage and below-grade square footage have different values, and this is also true when it comes to different types of basements. For example, walk-out basements that have more natural light by accommodating sliding double doors and regular size windows will add much more value to your home than a fully enclosed, non-walk-out space that has no natural light and four enclosed walls.
So, if you’re thinking of selling your home, the factors above can be a great compass when deciding how to proceed with your basement renovation to get the best return on your investment.
Value and Homebuyers
Homebuyers Will Value the Space
Regardless of how much value your remodel will add to the overall dollar amount you sell your home for, remodeling your basement will still elevate your home in the eyes of homebuyers who are looking for that additional living space now more than ever. At the time of writing this blog, we are still in a seller’s market, meaning there is low inventory and a lot of competition for houses. This means when buyers compare your home to others on their list, having a livable basement can help set your home apart and make it more desirable than others in your area that don’t. Hiring the right realtor to help facilitate the sale and negotiations can help manage demand and net you more money.
It Will Cost You Less Than Adding Space Upstairs
When considering your basement remodel, it’s also important to note that remodeling your basement will cost you a lot less than adding an above-ground living space, as it most likely already houses some of the framework to accommodate livable space. Not having to add framing, a foundation, or electrics can make remodeling your basement a much more cost-effective way to add livable space to your home.
Remodeling to Use and Stay
Adding Personal Value
The final point we want to make is if you’re choosing to remodel your basement for you and your family, and you plan to stay there for decades to come, value is much more subjective, and remodeling your basement will of course add value to your day-to-day life. Extra living space, more privacy, more home to grow into, the option to move parents in at a later date with a mother-in-law suite… The possibilities are endless.
There are many options on how to create usable space in your basement and each will affect the value of your home in different ways. Remember that our quotes and in-home estimates are free of charge. Contact us to get started!