A basement can add a large liveable space to your home (I know it did for our neighbors), but is it counted as square footage when calculating the total size of a house?
Both finished and unfinished basements are usually not included in the square footage of a home. Provided all the rooms in a basement are below ground level, the area is still not included in total square footage even if professionally refurbished.
Let’s dive down into the subject of basement square footage in more detail, and discover how exactly this is handled when it comes to calculating the total size of a property…
When Can You Count a Basement in Square Footage?
Industry experts, real estate institutes and councils all agree that unfinished basements should never be counted in square footage numbers.
For finished basements, most experts say that if all the rooms in your basement are below ground level, they shouldn’t be included in a total square footage number, even if they are professionally and expensively finished.
But (and this is a big one) – legal rules for this finished basement question vary from state to state, lender to lender and sometimes even amongst realtors.
The problem is that although there are standards and guidelines, no actual laws exist that dictate how to calculate square footage in houses.
This is not a small problem. Square footage is a critical metric for establishing a house’s value. Realtors use square footage numbers to assess nearby sold houses for price comparisons to help set bid prices.
Banks use it to make sure the house has enough value for their loan. Websites do quick math using total square footage to show you price per square foot comparisons.
Whether you are a buyer or a seller, it pays to know where the square footage grey areas are so you can try to stick to an apple-to-apple comparison. Those kiwis and bananas – they can cost you big bucks.
There are four measurement standards in real estate. There’s The American National Standards Institute (ANSI), Fannie Mae, Federal Housing Administration/U.S. Department of Housing and Urban Development (FHA/HUD), and the Employee Relocation Council (ERC).
Here’s a good website where you can read the four measurement standards.
Here are some definitions to help. The first one is “grade”. Grade, in real estate, refers to the ground level. Inside the house, the elevations of the floors in each room are measured.
If the level of the floor of a room at any point is even a foot below the level of the ground outside, then the entire room must be considered “below grade”.
Another standard term for basements is “livable”. What does that even mean? Not surprisingly, definitions vary, but many include things like ceiling height, windows, and plumbed-in heat.
Legally safe ingress and egress are also key – does your basement space have a door that leads directly to the outside, in case of a fire? Or a window that is specifically designed to allow adults to get outside?
Most listings and websites list the square footage. But where does this number come from? Even physically measuring square footage in a house is not entirely straightforward – not all houses are squares and ground level is not always flat.
Often, realtors will take the easy way out and just copy the square footage from an earlier sale and call it good. Or realtors won’t list the square footage at all because they don’t know the source of the number and don’t want to get it wrong.
In areas where basements are common, realtors may list two square footages instead of one: one for above ground level and one for below ground level.
Added together, they make up the total square feet. But, beware, unless they clearly break out the two numbers, you may be misled by that large grand total.
How do you avoid those kiwis and bananas? If you are thinking of buying a house, double check for basement kiwis by doing some online sleuthing.
Study the listing photos, floor plans, list of room dimensions and videos of the house to see if you can snoop out whether part of the house is actually below grade but included in total square footage.
Check state or county records to make sure you have all the information available. If the listing is skinny on details, but you still want to see the house, take your tape measure to the showing or use an imaging software to do a scan of the house to double check the footage.
If you are a potential seller, double check the language of the listing before it goes live on MLS. Be aware of the footage definitions and make sure you are comfortable with your listing.
Does an Unfinished Basement Count in Square Footage?
Nope, never. Only finished basement square footage and only sometimes.
Does a Finished Basement Count in Square Footage?
Mostly not – like 99% of the time. But exceptions do exist, so check with your realtor, the state you live in, or your county’s assessor’s office for their definitions.
The rule varies partly because they are tied to local terrain and climate. Rules in a flat area with a wet climate and a high-water table may be different than in a dry, hilly area where houses are built into steep hillsides and walkout basements are everywhere.
Then, there’s the grey area of the word “finished”. Experts say that a basement can’t be counted as “finished” unless it fits the standard of the rest of the house.
The walls, floors, ceilings, windows, and light fixtures should be of the same materials and quality as the upstairs.
To be considered finished, there should be a fully functioning electrical system.
There should be an installed heating/cooling system, preferably integrated with the one upstairs. Walls must have drywall – no cement walls. Ceilings can’t have exposed floor joists. Floors must be finished, not painted.
Is a Finished Basement Considered To Be Living Space?
Usually yes. Confusingly, though, it’s footage still shouldn’t be included in the total square footage count.
In general, “livable” basements must look exactly like the rest of your house, have the same heating and cooling systems, and have a safety exit. For the specific rules in your area, call your county appraiser’s office or make an appointment with a professional appraiser to come to your house.
Here’s a website with a good discussion of living space.
Does Finishing a Basement Add Value To a Home?
Yes, almost always. If you are considering listing your house, the realtor rule of thumb is that a finished basement adds around half the value of the same footage that is above grade.
Let’s say that you live in an area where homes have been selling for $300 per square foot (finished, above grade).
That means if you have a 1,000 square foot finished basement, you could potentially get $150 per square foot, or an extra $150,000 for the finished basement.
If you have an unfinished basement and are considering whether finishing it is a good investment, most experts say that an investment of 5 to 10% of your home’s value is fairly safe.
If you aren’t thinking of selling your home any time soon, also consider the lifestyle value add for you and your family. Adding a kid’s play space, teenager hideout or home office may make the decision well worth it.
Is a Walkout Basement Included in Square Footage?
Not usually but check the rules for your area. In some areas, walkouts are so common that the rules have been adjusted.
In areas where houses are commonly built on steep hillsides, some basement areas may be above grade. In this case, the finished square footage of a walk-out basement might be listed as “Finished Below Grade Square Footage”.
Some appraisals will include the entire basement square footage when the finishing and traffic flow of the basement makes it integral to the rest of the house.
Is a Basement Considered To Be a Story in Your House?
Not usually. In general, only floors above grade can be considered stories. But if the basement is more than half above grade, like for a walkout basement, it may be considered a story.
Ultimately, just so long as all the rooms in your basement are below ground level then in most areas this will not count towards the total square footage of your house.
This applies even if – like our neighbors – you’ve invested a lot of money finishing your basement to a very high standard. Which is good news for them as it will significantly raise the value of their home.
I guess it looks like we need to dig ourselves a basement now! 🙂