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Is a Basement Included in the Square Footage?

This is the tale of two basements in otherwise comparable houses. One is a finished basement with a den, bedroom, and full bathroom. The other basement has some Sheetrock, an exposed toilet, and a painted floor. The listing for the first house reflects the basement and number of bedrooms, including the one in the basement space, in its total square footage and price. The second house only includes the square footage of the main floors and does not count a 200-square-foot bedroom in the basement.

So, which listing correctly shows the square footage for a basement? The short answer is: both.

Does a basement count toward overall square footage?
As a general rule of thumb, listing agents and appraisers don’t count a finished basement toward the overall square footage, especially if the basement is completely below grade—a term that means below ground level. Whether an appraiser includes basement 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 basements and square footage
For the states that do allow listings to include a basement 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 basement area without fire evacuation access separate from the rest of the house. If the above-ground floor is on fire, the room in the basement must provide at least window access to the outside. This is also known as a walk-out basement, and the square footage is calculated based on how much of the basement is above grade.

How square footage affects your mortgage
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 basement 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 basement square footage affects your home value
While the price per square foot for a swanky basement isn’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 basement. This is true whether the basement is a walk-out or below ground.

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.

If you are interested in knowing what your home could sell for in today’s market, give us a call. My team and I are on standby and ready to help you take the smoother road to sold.


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