Finished basements…A value proposition
Vaughanblog.com welcomes your thoughts, opinions and questions. Feedback is a hallmark of my philosophy to improve quality and service in virtually all aspects of business and life.
I particular enjoy answering questions you may have and while I cannot guarantee I will always have a satisfactory answer, I can promise you that I will do my best to research the answer.
You can click on the button to the right which will provide you with a convenient submission form for your question.
That said, a reader of VaughanBlog.com recently submitted the following question:
Hi Carl, this question is regarding finishing the basement. When purchasing our house in Woodbridge we bought a house with separate entrance to the basement with the thought of resale at the time, we did not need it as it’s only my wife and I. Are there any benefits to finishing the basement and does it add any value to the potential resale?
As this may be a common question among home owners, I thought I would share my response:
Thank you for your question above. In the case of a two-storey house (which is probably likely in Woodbridge), one third of the potential living space is in the basement. If it’s a bungalow, it’s generally half. To your question, does it add value? In most cases, there would definitely be added value, all else being equal when compared to a similar home without. The more interesting question is what is the relationship between the cost to finish and the added value that results. Most realtors will probably agree that unless there is a significant amount of “sweat equity” (i.e. the work is done by the homeowner), improvements made to a home generally do not recoup full cost. The real benefit however, is that such improvements definitely add to the marketability of a home. If you engage a listing Realtor to sell your home, he or she should be able to prepare a comparative market analysis based on comparable properties that are for sale or have recently sold in your neighbourhood. This may assist in the determination of the value impact of similar homes with and without basements. I’ve recently been dealing with a few new home buyers who typically are looking into modestly sized starter homes. With smaller ground floorplates, access to finished living space is high on their priority list for example. An interesting study completed on behalf of the National Association of Realtors (the American counterparts to the Canadian Real Estate Association), suggests that on average, a midrange basement remodel project resulted in a return of value of about 75% of the original cost. You can visit the study @ http://www.costvsvalue.com/index.html for more information. Keep in mind it is an average only and represents a different market, so caution should be used in interpretation.
Hope that helps.
There may be many other considerations involved so before you roll up your sleeves, seek some professional advice.
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