I was asked a question this week about what qualifies as “finished” basement area in a home. An agent was going to list a home and the basement area had some partitioned sheetrock walls in the basement. The homeowner wanted to count this as finished area, so the agent wanted to get clarification on how this would be considered in an appraisal.
Even though some homeowners may use a semi-finished area as a recreation room or bedroom there are certain criteria that the area should meet to be considered as finished livable area. Lets take a look at how the appraiser will look at the basement area to determine if it will be given consideration.
It is heated and cooled? One of the main criteria that an appraiser looks at is whether the room(s) in question are heated and cooled with the same type of system as the rest of the home. If the rest of the home has a central heating and cooling unit then the basement should have a similar system. You must also look at what is typical within the market the home is located in. If the general public, including potential buyers, expects a finished basement to be heated and cooled with a central HVAC system then this will be the measuring stick the appraiser will use with the subject property. A window unit A/C and wall heater will not due in this scenario.
Is the quality of finish similar to the rest of the house? I have appraised homes where the owners kept the concrete block walls and floors in the basement, and painted them. This degree of finish would not typically be considered comparable to the rest of the home, which usually has sheet rock walls and floor finishes of carpet, wood, tile, or vinyl. At other times the basement would have acceptable floors and walls but the ceiling may consist of exposed beams and rafters that are painted. In some areas this is an acceptable building style and it would be considered as finished area, that is of course if it is heated and cooled.
How do you access the basement? This point is not as important as the previous two, however it may affect how much value is given to the area. Obviously if you have access to the basement from inside the house it is going to provide a more functional floor plan, as opposed to going into the area through the basement only. The majority of homes I have appraised that have a basement provide access to the basement level through interior stairs, however I have heard of older homes that require you to go into the basement from a basement level door in order to gain access to the finished area.
The above requirements make it pretty clear as to what qualifies as finished basement area. Do you have any questions about basements and how appraisers look at them? Leave me a comment I would like to hear your thoughts.