Does a Finished Basement Add Value to a Home?

5 minutes read

Did you know not every change you make to your home adds value? Even expensive remodels do not always pull their weight in terms of value. A common remodel many people put a lot of weight in is the basement remodel. They assume a finished basement adds value to a home. In many cases, it does add value. However, you have to know the ins and outs of the entire process in order to see the greatest return on your investment. Just like on the main level of your home, not every change results in increased value.


First, keep in mind that your basement is “below grade.” In real estate terms, this means it is worth less than the upper levels. As a rule, any changes you make in the basement give you about half of the value they would in the upper levels. Of course, this may differ by area and appraiser, but it is the consensus. If your main goal is to see a return on your investment when you sell your home in a few years, keep your changes conservative to maximize your return. If, on the other hand, you do not have plans to move any time soon, you can make luxurious changes. Just do not expect a dollar for dollar return on your investment. If you think you may move within the next 5 years, it is best to keep things simple.

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Whenever you make changes to your home, you should consider the resale value of the change. Even if you think you will stay there for 10 years or more, you always need to think of the future. In terms of the basement, you want to make useful changes. Think of things that other people might see a use for, rather than staying single-minded. Things like adding a bedroom, office, or bathroom are universally useful for most people. If, on the other hand, you decided to add a billiards room or basketball court, your target audience will dwindle rather quickly. If turning a profit is your main goal, keep the changes as simple as possible while providing additional living space in the home. A few of the most common changes include adding a bedroom or entire suite for aging parents; home theater; and playroom for kids. Of course, there are many other options, but these are the common uses you will see throughout many areas.


The lower level of your home poses a unique challenge when you decide to finish it. The two most common issues are moisture and lighting. Things like cracks in the foundation or mold growth are common basement issues. Consider paying for an inspection before you start any projects in the basement so you know ahead of time what you have to do. It is usually a bad turn of events when homeowners have to fix moisture issues found after they started the remodeling process. This makes the cost of the inspection well worth every penny it costs.

Another issue in the basement that you may not have in other areas of the home is lighting issues. If you have been in an unfinished basement, you likely know the dimness of the area. Many people prefer to avoid basements because of the dark, dank feeling they get. When you finish the basement, you need to keep this in mind. Because you will not get too much natural light in the basement, you need to rely on artificial lighting. Play around with different options to see which provide the best results to help your basement look as pleasant as possible.


Unfortunately, the value your finished basement adds to your home is dependent on the comparable sales in the area. The changes your neighbors make as well as the layout of the homes will play a role. For example, if you went all out and created more living space downstairs than you have on the main level, you may not gain as much value as you thought. If your neighbors all have more living space upstairs than downstairs, their values will be higher than your value. Before you spend money on fixing up your basement, it pays to check around and see what others in the area have done. Your local appraiser or a real estate agent can help you with this process.


In general, you can expect to receive less than 3/4th of the cost of the basement remodel. Conservatively, figure around 65% of the costs, assuming you paid average costs for the remodel. If you make the changes because you need the room or have a use for the changes you make, then it is well worth it. If you make the changes because you think you will sell your home for more money, you may want to consider the changes very carefully. In addition, make sure the changes you make match the rest of the house. Even though the basement is on a different level, buyers still like uniformity. For example, if you have a contemporary upstairs but a modern basement, the house does not flow. This can affect the return on investment you make.

The bottom line is that a finished basement can add value to your home. Just how much it adds greatly depends on the changes you make and the area you live. Before you do anything, consult with a professional. They can tell you the changes others make and how much of a return they see on their investment. Sometimes you may not care about the return on your investment because you have a use for the changes. However, thinking of the future and the money you will receive when you sell the home almost always plays a role. Make your decisions carefully with the help of trusted professionals and you should see a nice return on your investment.

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