Does Finishing a Basement Add Value When Selling?

Size

• Two of the major reasons why a finished basement adds to a house's value are an increase in size and use. As a general rule, because home values are based on size, this will increase the value of your house. Keep in mind, however, that if you are increasing the size of your house by 20 percent, the value of your house may not increase by the same amount. This is because the value is at the mercy of the market's demand and supply, which may not directly correlate with the size.

Uses

• The more general the use of a finished basement, the more value it will add to the house. A space that is built exclusively for a certain purpose may not be in demand as much as a space that can be used in a number of ways. Homeowners typically enjoy when they can easily fit their lives around the new home they are purchasing. As a result, adding large open spaces to a basement that can be used for entertainment, exercise and work is the best route.

Market

• The market's supply and demand are major factors of how much value a finished basement can add. It is important to understand that while a finished basement adds value to a property the amount of value depends on the demand for it in the local market. The amount of houses with finished basements will also have an impact on the actual value of finished basements in your market.

Pitfalls

• Poor quality basement refinishing jobs can be a complete deal breaker when trying to sell a house. This is because potential homeowners may not want the headache of taking on a project immediately after moving in. As a result, it is in your best interest to pay for quality workmanship when finishing your basement. Another pitfall is that with a finished basement comes an increase in energy and home maintenance costs that may decrease the demand for your home.