Financing in 37211>Question Details

jdickson, Home Owner in Nashville, TN

Does a finished basement add value in Nashville?

Asked by jdickson, Nashville, TN Tue May 15, 2012

Our finished basement has french doors, a side door, and large windows in each room. When we purchased the property and when we refinanced in 1999, it was counted as living space. It was not counted in an appriasal we had to refi this week, and it really brought our square footage down.

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A basement is included on a seperate line in a standard 1004 appraisal report. This can often be confusing and difficult to see.
There is no guideline that says a basement has to be "cooled" for it to be included, some agents need to read up. It also does not have to have CENTRAL heat. It has to have a permanent heat source only.
The appraisal forms and the way they are written has changed significantly since 1999, they are even harder to read now,
A single family residence is measured in terms of above grade living area with the basement added yet not in the GLA.
The quality of the finish is the ultimate test of how much value it has in the market.
1 vote Thank Flag Link Tue Jun 12, 2012
In so far as adding value it is really all about how much it feels like living space. Even if it has A/C it can still feel like a basement which does not add as much perceived value as 2 level home.
0 votes Thank Flag Link Fri Nov 30, 2012
Depending on the quality of finishes, functionality, and access a basement may be perceived to many buyers as a value.
0 votes Thank Flag Link Thu Aug 23, 2012
Yes< depends how well its finished out and how tall ceilings and daylight or not, etc. Basements are hard to find in Nashville and area, and a must have for many moving here from other parts of country where basements are the norm.
0 votes Thank Flag Link Sat Aug 18, 2012
The appraiser will and usually is required to go by tax records. Likely your finished basement was not properly permitted and cleared by an municipal inspector. Although you will likely have to pay a penalty to you county/city's permitting office, you may want to consider getting the proper permits before selling your home as you technically should not market your home with added sq ft if this has not been done and could potentially leave a buyer with a way out of the contract.
0 votes Thank Flag Link Thu Aug 16, 2012
What's your ceiling height? That can affect the viability is appraisable space.
0 votes Thank Flag Link Tue May 15, 2012
A basement on a primary detached home is not given the same value per sf as finished sf above. Basements are discounted by 60% to 80% depending upon finishing materials used and quality of the installation. A basement will add value when you sell your home against other comparable homes without a basement.
0 votes Thank Flag Link Tue May 15, 2012
From a lending perspective It has whatever value buyers are placing on it reflected in closed purchase contracts of similar properties.

If the basement is truly finished out I don't think the appraiser would exclude it from his value calculation he/she just placed it on the proper place in the appraisal. Finished Basements are reflected as below grade square footage and the appraiser has a responsibility to look for comps that would have similar below grade improvements. There will be adjustments on the appraisal either increasing or decreasing the value of your house based on the amount of finished square footage compared with those of sold properties.
0 votes Thank Flag Link Tue May 15, 2012
A finished basement must be fully finished: Drywall sides and ceiling, recessed lighting and tastefully painted. Still, if it is fully finished and up to codes, it will only get appraised up to 60% of the main floor value if you are lucky. It must also have Central Heat and Air. There are many more requirement for a basement now than ever before.
0 votes Thank Flag Link Tue May 15, 2012
Wow. Patrick, you are an Agent and are giving bad advice. It MUST have central heat and air? Wrong. There are no appraisal guidelines that state that a home has to have central heat or air, even the basement. It must have a permenant heat source, which doesnt have to be central.
Tastefully painted? Really?
Flag Tue Jun 12, 2012
Yes the appraiser should have included the finished square footage in. As long as the final number was sufficient to get your refi done you have nothing to worry about. When you sell it you will be able to include the square footage and get fair value.
0 votes Thank Flag Link Tue May 15, 2012
Typically it does add value however you won't get as much on a re-sale as you would the rest of the house (in dollar per SF). As long as it is heated and cooled then I don't see at all why the appraiser would not count it. Doesn't make sense.

Stephen Strickhausen
http://www.sstrickhausen.com
0 votes Thank Flag Link Tue May 15, 2012
A finished basement does add value. The better the basement, the more value it adds. One caveat though, getting rid of a garage takes away some value. It sounds like you have a lot of daylight so that helps. A lot of agents say basements count at 50% of the upper level prices per foot. I have seen daylight basements which had wine rooms and theatre rooms on the side without daylight that sold at the same prices per foot of upper levels.

Was the basement permitted and approved? Although your appraisal didn't list the basement square footage, you can still list the square footage in the future when you choose to list the home. For the MLS you can use the tax record square footage (which should include it if it was permitted) or a professional measurement rather than the prior appraisal.
0 votes Thank Flag Link Tue May 15, 2012
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