This is kind of a 2-part question. Lower level finished area is less expensive to finish than adding on above grade, but it usually is not valued equally. I'm not an appraiser, so hopefully there is someone here on Trulia that can give you more accurate percentages of value.
But, if the lower level finished area will be of equal quality to your main floor, and has proper egress or an exposed lower level, you will have a more marketable home. And usually a buyer who is comparing homes - some without finished basement and some with... well usually the finished space wins out.
One thing to keep in mind, is that you won't get 100% of the cost on return, but if this is being done with the intention of it being a long-term improvement for your family's comfort, it has value to you.
Also, make sure that you aren't improving your home well above the other homes in your neighborhood.
All the Best to you and your family
Permitted room additions also have a higher percentage of cost recoup then finished basements or attics. A finished basement with the basics would also present a better selling point than an unfinished basement. The market area of the property also dictates what is more acceptable. In an area where room additions are not common, could result in the addition being considered an over-improvement for the market area, whereas if finished basements are common, could result in a slightly higher value (above minimum) due to being a more desirable feature in the market area.
Please check out the link below on area return on remodel. It is awesome. Good luck.
Lower level square footage is not counted as high per square foot as above ground square footage (it doesn't cost as much to finish). As far as buyers, it will add more value in thier perception, provided the finish is done in a professional manner.
If you're going back and forth between an addition and finishing a lower level, there are many variables to consider. Typically, more above ground square footage is favorable for resale. The lower level can be viewed as a bonus/added footage for people to finish, even at a later date. (if you're comparing a 1000 sq ft with a finished ll =total 1600 vs. a 1700 sq. ft. without a finished ll = possible total 2300 sq. ft.)
The most important advice I can give is to remind you that not all situations are the same. You are going to want to speak with a professional about your goals, cost vs. ROI, neighborhood, etc. for what best fits your needs.
Hope this helps. If you have further questions, feel free to check out the website below or contact me.
Restaino and Associates
The report finds that you can recover at least 72% of the cost of the remodel, when you sell the property and it is among the highest returns in terms of remodeling investment.
Add to that the fact that you can finish a basement for about 50% of the cost of building an addition, and that an insulated basement makes your home significantly more energy efficient, so you will be saving a lot of money in utility bills, and you will see that basement finishing actually pays for itself.