This is thetale of two basem*nts in otherwise comparable houses. One is afinished basem*ntwith a den, bedroom, and full bathroom. The other basem*nt has some Sheetrock, an exposed toilet, and a painted floor.
The listing for the first house reflects the basem*nt and number of bedrooms, including the one in the basem*nt space, in its total square footage and price.
The second house only includes thesquare footageof the main floors and does not count a 200-square-foot bedroom in the basem*nt. So, which listing correctly shows the square footage for a basem*nt? The short answer is: both.
As a general rule of thumb, listing agents and appraisers don’t count a finished basem*nt toward the overall square footage, especially if the basem*nt is completely below grade—a term that means below ground level.
Whether an appraiser includes basem*nt living space ultimately depends on which state you live in. Your local county assessor’s office determines whether appraisers can count the square footage, finished or unfinished, as part of what’s known as the “gross living area.”
Walk-out basem*nts and square footage
For the states that do allow listings to include a basem*nt in the square footage of the overall living space, there must be an egress and ingress.
One reason for this rule is that you cannot have a legal bedroom in a basem*nt area without fire evacuation access separate from the rest of the house.
If the above-ground floor is on fire, the room in the basem*nt must provide at least window access to the outside.
This means a door you can walk out of to yard level on one side of the basem*nt, says Sharon Chambers-Gordon, a real estate agent with Windermere Professional Partners in Gig Harbor, WA.
This is also known as a walk-out basem*nt, and the square footage is calculated based on how much of the basem*nt is above grade.
The overall square footage of real estate factors into an appraisal and, therefore, the financing of a house. Your appraiser must generally appraise the house for the sales price, or higher, in order for the lender to provide the funds.
Here’s what mortgage giant Fannie Mae has to say on the basem*nt matter: “Only finished above-grade areas can be used in calculating and reporting of above-grade room count and square footage for the living space. Fannie Mae considers a level to be below grade if any portion of it is below grade, regardless of the quality of its finish or the window area of any room.”
How finished basem*nt square footage affects your home value
Unlike commercial real estate, homes aregenerally not priced strictly on square footage. So whether a basem*ntis included in square footage or not, anicely finished basem*nt generally adds to thevalue of a home, saysCarrie Abfall, a real estate agent with Re/Max Real Estate Professionals in Columbus, IN.
While the price per square foot for aswanky basem*ntisn’t typically as high as main-level upgrades, an appraiser or potential buyer will certainly appraise the home’s value as higher with the additional living space of a basem*nt. This is true whether the basem*nt is a walk-out or below ground.
If the home with the finished basem*nt wowsa buyer, it may fetch a higher price, says real estate agentRandy Elginwith Keller Williams Realty in San Antonio, TX.
This is true even if the square footage is not included in the listing. Elgin advises that you offer what you think is reasonable, based on the home’s gross living area plus some fair amount for the unfinished or finished basem*nt.
Focus on the usable space and how much value you will gain from it. And include an appraisal contingency in the offer. That way, you can back out if the appraiser places a lower value on the home than you expected.
