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Monetary Adjustments Rennovations--how much is a finished basement worth?

By Cathy Tishhouse

Real Estate Agent with RE/MAX Showcase Homes

April 30, 2007 06:00 PM

As everyone is painfully aware, there is so much inventory on the market - particularly in Oakland County and the Royal Oak real estate market where I go on a lot of listing appointments. This is an area that ranges from first time buyers to higher end and lately I find so many homes for sale on the same street or in a comparable area which have varying degrees of updates/renovations. Some will have a one car garage and others two; some are detached and some attached; some have 1 bath, others 1 & 1/2 and others two. The last main category is finished basement compared to unfinished. There are others of course, but I am not finding a resource to help determine a standard plus and minus in terms of value when these differences play a part in determining a comparative market analysis (CMA). I have also started doing Broker Price Opinions (BPO) for asset managers and try to consult different people in my office. No one seems to have a resource and there are varying opinions on how much each of these items will affect the sale/listing price. Does anyone have a tool/list that they can share to help as a guide to pricing?

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Jason Vombaur

Keller Williams - Vancouver, WA

If the basement is fully finished I give it about $.75 on the $1.00. It it is not finished $.25 on the $1.00. If it is have finished you go some place in-between.

Apr 30, 2007 06:07 PM

Michael Ross

Coldwell Banker Residential Brokerage - Beverly, MA

North Shore of Boston

Are you counting the basement as living space? I would just go ask the solds you are using face to face and ask to see the basements. They will tell how much it costs! Get out in the field. You find answers.

Apr 30, 2007 06:10 PM

Herb Hamilton

RE/MAX Preferred Inc. Realtors - Portland, OR

Real Estate Broker ,CDPE, Downtown Portland

Cathy, I have never aproached the Basement Idea as a Price per square foot. Generally though as an example of total price.

1200 sq ft ranch single level no basement $220,000
1200 sq ft with 1200 unfinished basement $255,000
1200 sq ft with 1200 finished basement $270,000

Apr 30, 2007 06:21 PM

Robert Smith

Preview Properties, PC - http://www.RealEstateMich.com - Brighton, MI

SRES, Search for Homes Brighton-Howell-SE Michigan

Here's what I do. A house with a basement vs a house without is an additional $5,000. Period. If it's a walkout or a daylight that's $3,000 more.

If it's professionally finished I'll give it another $5,000 for every 1500 sq ft of finished basement space. Do-it-yourself jobs are half that. I know it's subjective to a point, but you know, that $10,000 finished basement won't command that much additional value to a buyer.

May 01, 2007 12:25 AM

Missy Caulk

Missy Caulk TEAM - Ann Arbor, MI

Savvy Realtor - Ann Arbor Real Estate

Cathy, I always try to use what appraisers use. I give no more than 10,000 for a finished basement.

I give 30.00 per difference is square footage. If it is a small house, I give 20.00. That is what appraisers do here.

Ask to see appraisals from your past clients sales and get to know your area and what the local appraisers use and then I just copy their values. I've been doing it long enough I know. One thing I am seeing out here is granite vs formica. I give 3800 because the price of granite has come down.

Hope this helps !

May 01, 2007 01:33 AM

Cathy Tishhouse

RE/MAX Showcase Homes - Royal Oak, MI

Royal Oak Real Estate

Thanks everyone - I am collecting all these and trying to make a guide. I have had clients ask me about this lately.

Missy - do appraisers give out the information they use - how would I get their values? I am still fairly new and don't know who I would approach for this information for my area.

May 01, 2007 04:13 PM

David L. Britt

Platinum Realty, LLC - Olathe, KS

MBA

Cathy, the price to finish a basement here in KC is around $18-35 per square foot depending on if the builder finishes it or if you have it finished later. I would be extremely cautious to hire a handyman without first seeing the work they do. I have seen some very expensive homes be depreciated in value with poor workmanship!

May 01, 2007 04:32 PM

Christopher Webster

EXP Realty, LLC - Columbia, SC

Columbia South Carolina Real Estate For Sale

Talk to some of your local appraiser to see their way of calculating! Also there is software if you google it.

May 01, 2007 06:19 PM

Missy Caulk

Missy Caulk TEAM - Ann Arbor, MI

Savvy Realtor - Ann Arbor Real Estate

Cathy, the next time you are at a closing, just ask your client to see the appraisal. Look at the value's they gave, plus or minus. Sometimes when I do a listing appointment, if the seller tells me they have and appraisal for 600,000 and I think the house ( gut feeling) is worth 450,000. I ask them if I can take a quick peak at the appraisal. So I do, over the years, I've learned how much value to give or take from my CMA's.

Or just call an appraiser in your community that you do business with and talk to them, ask them what they think of the market. How much value do they give a finished basement? How much more with bath room in LL.

May 01, 2007 09:49 PM

Cathy Tishhouse

RE/MAX Showcase Homes - Royal Oak, MI

Royal Oak Real Estate

Thanks Missy:

I have had more buyers than sellers - although that is changing. I just received an accepted offer on one of my listings and the appraisal shall be coming up soon. I am going to ask them when they make the appointment, if they will help me on this. I can see that it would vary based on areas and so I can see I need to do some research.

Chris - I will google it and see what I find - Thanks.

May 02, 2007 04:24 PM

Bret Casper

Oakview Realtors - Salt Lake City, UT

Realtor / Certified Appraiser

For Cathy & everybody here,

To find out how much the adjustments should be for specific features, appraisers use what is called a "paired sales analysis". Its not hard, its not complicated, and you can do it too. Here's how it works (for basement finish adjustment): Find two recent sales in the same neighborhood which are similar in all other features but one has a fully finished basement and the other has no basement finish. The difference in the sales prices between the paired sales is the amount that should be adjusted for the basement finish (or other feature). For accuracy, collect three or four pairs of sales for your analysis.

It is tempting to just call a contractor and ask how much he charges for basement finish but unless it is a new house, cost data will be misleading. Also bear in mind that almost every improvement costs more than the value than is added to the property and different price ranges require different rates of adjustment. In my area, in the median price range, basement finish costs $35.00 per square foot to install but only adds about half that much value at sale time - in addition to value per square foot you should also add a lump sum for the basement bathroom - if included (again, my area, median price range, add $1500-$2500 for a 3/4 or full bath).

May 03, 2007 08:58 AM

Cathy Tishhouse

RE/MAX Showcase Homes - Royal Oak, MI

Royal Oak Real Estate

Bret:

Thank you - that was very helpful. As I gain more experience as a Realtor, I realize the level of work that is needed to insure our clients get the best possible price and the responsibility of doing the best job for them. I just met with a client who has a great house compared to about eight I previewed but they have only one bath and unfinished basement--their unfinished basement looks cleaner and brighter than some of the finished ones. Until somebody enters the house, it really is about numbers and it is a huge decision for sellers to accept our recommendation about price. All of these posts have shown me to dig deeper and research--it is the kind of service they deserve and we should provide. Thanks again

May 03, 2007 04:15 PM

Cathy Tishhouse

RE/MAX Showcase Homes - Royal Oak, MI

Royal Oak Real Estate

Because of everyone's input, I met the appraiser at my home that is about to close. He was really helpful and took time to educate me. My seller was a little concerned that her home would not appraise for the selling amount after listening to him --it was not over priced so I am pretty sure all is OK. Anyway, what you said Bret was pretty much what he said. You never get back what you put into it and it is all based on the market in that area. He said about $1500 for bath. This is a starter home so he said he would not make that much of an adjustment for granite counter tops in that area but would expect them in a higher priced area. So I can see the paired share analysis would be helpful for each particular area as it would be different.

May 08, 2007 11:30 AM

Anonymous

Hello Cathy,

Could you tell the name of the software that you found that you can use for repair estimator. Thanks a lot.

Aug 07, 2008 08:03 PM

#14

Cathy Tishhouse

RE/MAX Showcase Homes - Royal Oak, MI

Royal Oak Real Estate

Whoever left the last comment and question - Thanks! I thought it would be a great idea to have a repair estimator and it was suggested I "google" to find a good one. However I never did this but I get questions from my clients many times - how much would it cost do do this etc. So, I just did a search and came up with a couple of sites. The last two are with Bob Villa and he seems to offer this for free but I did not go through the whole process - but bookmarked it for my future use. Here they are. I searched "repair estimator software" and "home renovation estimator software" so there were more also.

http://www.ozgrid.com/Services/excel-repair-cost-estimator.htm

http://www.bobvila.com/DesignTools/Calculators/toolsMain.html

http://www.bobvila.com/DesignTools/

Aug 08, 2008 01:05 AM

Chastity Guevara

Camelot's Quest Realty - Casa Grande, AZ

I recently opened a company with my sister and she is doing a lot of bpos. I have been trying to help her research the cost difference between the same points you have here. There is a lot of great info in here. Thanks

May 21, 2009 10:07 AM

Cathy Tishhouse

RE/MAX Showcase Homes - Royal Oak, MI

Royal Oak Real Estate

Thanks Chastity: I do a fair amount of BPOs and often have to make adjustments - so much more I could learn about this however - right now it is a rough estimate.

May 21, 2009 03:13 PM