Home Selling in Carmel>Question Details

Tom, Home Buyer in Austin, TX

Is there a general rule of what you can recoup when finishing an unfinished basement?

Asked by Tom, Austin, TX Mon May 12, 2008

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4
Tom,
No is the short answer. In general, lets say evey sale in your community has finished basements. Lets say they sell for $250k, You paid $250k for your home, finished your basement, and want $275k. All things being equal, you are at a big disadvantage if price is the only object. What I'm trying to demonstrate is that improvements such as your basement remodel derive value from the market, not a standard return on what was spent. You need to look at the a bigger picture of your project such as sq/ft finished , quality of work, quality of materials used, custom ammenities, etc. Then compare it to the general real estate pricing for homes like yours in Carmel, then to sales of similar homes in your community. Generally speaking, I can demonstrate an increased value, as additional finished sq/ft almost always raises your price. I have clients who have lost 50% and others who have gained 20% over their cost, all depending on the cost of their project and how it compaired the competition. So there is no hard and fast rule. I would say 70% ROI is fair but I would watch how you use that figure. Hope this helps gain perspective. -Eric
0 votes Thank Flag Link Mon May 12, 2008
Hello Tom!

I have to agree with the other answers. Depending on the quality of the finished basement, you can see an average of 60-70% ROI. Keep in mind that if your basement is a walkout, it will command a higher return.

When I am doing a CMA on a home with a finished basement, I often times will add $5-$20 per square footfor finished vs. unfinsihed depending on the quality. I recently worked with a couple that finished their basement a little over a year ago; added over 700 square feet of living space to their home, a fireplace, and added to their overall enjoyment of the home. They spent about $20,000 doing it, and I was able to estimate that added a little over $14,000 to the previous value of their home. That is just over 70% ROI. It was worth finishing this space for them as it added to their overall enjoyment of this home for over a year. Plus, this home sold faster than comparable homes due to this added space and the quality of this space.

Good luck!
Lisa Howell
0 votes Thank Flag Link Mon May 12, 2008
Depending on the quality of construction you can realistically expect a 50-70% return on your investment.
Thank you,
Team Endicott
RE/MAX Integrity
Fishers, IN
317-915-0900
0 votes Thank Flag Link Mon May 12, 2008
Great Question Tom!

As always it will depend on how you plan to rehap the basement. I have seen folks build "adult toys" (bars, pool table, etc) that will not appeal to someone wanting to buy that has small children.

If your going to be in the home for a while build it to suit your needs. Use quality materials for walls/ceilings/floors and be flexible with the rest.

One thing you will need to watch is how the propety assessor looks at the basement. My brother-in-law was just reassessed. When first done the basement was not done and deemed non-liveable. Since complete he now has a bunch more square feet and higher taxes.

According to annual surveys by Remodeling Online, homeowners who spend $50,000 on major basement remodeling can expect to add just under $40,000 to their home's resale value, or recoup 79.3 percent of their investment.

Hope this helps. If you have any questions about financing your finished basement I have companies with great options to refiance your first mortgage or add a second or line of credit.

Good luck
Tony
Web Reference: http://www.sagamorehm.net
0 votes Thank Flag Link Mon May 12, 2008
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