As a real estate appraiser, I have often encountered homeowners who are surprised to learn that finished basements are not included in the total living area of their home. While it may seem unfair to exclude this valuable space from the calculation of the home's value, there are several reasons why this is the industry standard.
One of the reasons is that building codes play a significant role in determining what can be considered living area. Building codes establish minimum requirements for structural integrity, fire safety, and other essential features that are necessary for a space to be considered livable. Finished basements may not always meet these requirements, particularly if they were not originally designed as living spaces. They may lack proper egress windows, smoke alarms, or other safety features required by building codes.
Additionally, the American National Standards Institute (ANSI) defines living area as the "finished, above-grade residential area that is heated and cooled for year-round occupancy." Finished basements, by definition, are below-grade spaces and therefore do not meet the ANSI standards for above-grade living area. Finished basements may also lack the necessary amenities, such as proper ventilation, lighting, and ceiling height, to be considered livable spaces.
Moreover, finished basements are not considered part of the above-grade living area of a home. Above-grade living areas are typically more valuable than below-grade spaces, as they offer better natural light, views, and a more comfortable living environment. A home with a larger above-grade living area is generally more desirable to homebuyers and can command a higher price than a home with the same total square footage but with a larger finished basement and smaller above-grade living area.
It is also worth noting that including the finished basement in the total living area of a home can be misleading. Buyers may assume that the finished basement is a fully livable space when it may not be up to code or lack necessary amenities. This can lead to unrealistic expectations and potentially lower offers on the property.
In conclusion, there are several reasons why finished basements are not included in the calculation of living area square footage. These reasons include building codes, ANSI standards for above-grade living area, the potential issues with livability, and the fact that above-grade living area is generally more valuable than below-grade space. As a real estate appraiser, my goal is to provide an accurate and fair appraisal that reflects the true value of the property, and excluding finished basements from the living area calculation helps me to achieve that goal.
