A Very Silly Real Estate Hypothetical
September 20, 2023 7:59 PM Subscribe
I live in a "raised ranch" home where the front door opens onto a half set of stairs going to the main floor. Another half set of stairs goes to the "basement," so designated because the part of the wall of that floor facing the street is partially below grade. (The back wall is entirely above grade.) Because this is "basement" space, it does not count toward my home's square footage total, indirectly affecting our home value as well. Purely out of curiosity, my question is: if I were to dig that wall out, such that it was no longer below grade, would my house then become a two story house, with a higher square footage count and a (somewhat) higher estimated value?
I told you it was a silly hypothetical.
I told you it was a silly hypothetical.
Where I've lived, that would be called a "split level".
I don't know that your assumptions are sound. There's a bunch of different definitions of what the square footage of a house is, and all are equally valid for their given purpose. I don't know that the kind of square footage that excludes a partially buried basement is the kind of square footage that would matter for real estate, and if it does, that's kind of messed up, assuming the "basement" is finished, which was the case in the split levels I'm familiar with.
In my experience, where the square footage that excludes the basement comes into play is for zoning regulations that limit the gross floor area of a building in a effort to moderate "bulk and scale" in a given area so that the buildings are all within some given range of size relative to their lots. In that case, digging out your basement might result in your house being in violation of the zoning code and you'd have to tear it down, which would definitely not be good for its market value (but really, you'd have to apply for a permit which would be denied on that basis if it were applicable anyway).
I would guess that a lot of houses in your area have daylighting basement floors, and if those aren't typically included in the floor area on a sales sheet, that people generally know the deal and you won't be fooling anybody. I would also think that a savvy realtor would list whatever the "finished" or "habitable" (total floor area minus garage and utility space) square footage of the house is on the sale sheet so that potential buyers know what they're actually getting.
posted by LionIndex at 8:25 PM on September 20, 2023 [3 favorites]
I don't know that your assumptions are sound. There's a bunch of different definitions of what the square footage of a house is, and all are equally valid for their given purpose. I don't know that the kind of square footage that excludes a partially buried basement is the kind of square footage that would matter for real estate, and if it does, that's kind of messed up, assuming the "basement" is finished, which was the case in the split levels I'm familiar with.
In my experience, where the square footage that excludes the basement comes into play is for zoning regulations that limit the gross floor area of a building in a effort to moderate "bulk and scale" in a given area so that the buildings are all within some given range of size relative to their lots. In that case, digging out your basement might result in your house being in violation of the zoning code and you'd have to tear it down, which would definitely not be good for its market value (but really, you'd have to apply for a permit which would be denied on that basis if it were applicable anyway).
I would guess that a lot of houses in your area have daylighting basement floors, and if those aren't typically included in the floor area on a sales sheet, that people generally know the deal and you won't be fooling anybody. I would also think that a savvy realtor would list whatever the "finished" or "habitable" (total floor area minus garage and utility space) square footage of the house is on the sale sheet so that potential buyers know what they're actually getting.
posted by LionIndex at 8:25 PM on September 20, 2023 [3 favorites]
Like, if people looking at houses are touring a bunch of properties and see your house, then see one down the street that's pretty much the same but still buried, they're probably not going to give you an extra $70K or whatever. Because is your house actually worth that extra $70K? It is not.
Also, if increasing the floor area bumps up your house valuation, does it then bump up your assessed value and your property taxes?
posted by LionIndex at 8:34 PM on September 20, 2023 [3 favorites]
Also, if increasing the floor area bumps up your house valuation, does it then bump up your assessed value and your property taxes?
posted by LionIndex at 8:34 PM on September 20, 2023 [3 favorites]
Who is counting the square footage? A realtor? An appraiser? The county you are in for tax purposes? The city you are in for zoning? All square footage is accounted for but typically, for taxes, certain square footage is appraised differently. And you should be able to ask this question to the tax authority. Realtors do all kinds of silly things and are not really bound by any particular assumption. An appraiser looking at market value would be concerned with habitable space and merely having more sunlight on a wall may not do it.
posted by amanda at 8:38 PM on September 20, 2023 [3 favorites]
posted by amanda at 8:38 PM on September 20, 2023 [3 favorites]
Response by poster: Heading off a few things:
posted by DirtyOldTown at 8:41 PM on September 20, 2023 [1 favorite]
- No, basement square footage really does not count toward your square footage count for real estate listings. Not in most states and definitely not here in Illinois. If you are still disinclined to believe me kn this point, please Google to your heart's content.
- This is a thought exercise about loopholes on arbitrary real estate standards, not an attempted scam. No one is considering attempting to "fool" anyone, even within this purely hypothetical scenario.
- Basement square footage does not count toward square footage, but is not literally valueless either. The question is whether that footage going from basement to traditional living space would increase the assessed/listed for sale value.
- Yes, one would assume this affected tax value.
posted by DirtyOldTown at 8:41 PM on September 20, 2023 [1 favorite]
Basement square footage does not count toward square footage, but is not literally valueless either. The question is whether that footage going from basement to traditional living space would increase the value.
If you would be adding egress windows so that space on the front of the house could be used as bedrooms or whatever, that's a different story, but might bring up some other zoning issues. I don't think just unburying it really moves the needle for what people are going to pay for, regardless of the number in a real estate listing.
From the linked article:
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.
And basically what everyone is saying:
Unlike commercial real estate, homes are generally not priced strictly on square footage. So whether a basement is included in square footage or not, a nicely finished basement generally adds to the value of a home, says Carrie Abfall, a real estate agent with Re/Max Real Estate Professionals in Columbus, IN.
posted by LionIndex at 8:52 PM on September 20, 2023 [2 favorites]
If you would be adding egress windows so that space on the front of the house could be used as bedrooms or whatever, that's a different story, but might bring up some other zoning issues. I don't think just unburying it really moves the needle for what people are going to pay for, regardless of the number in a real estate listing.
From the linked article:
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.
And basically what everyone is saying:
Unlike commercial real estate, homes are generally not priced strictly on square footage. So whether a basement is included in square footage or not, a nicely finished basement generally adds to the value of a home, says Carrie Abfall, a real estate agent with Re/Max Real Estate Professionals in Columbus, IN.
posted by LionIndex at 8:52 PM on September 20, 2023 [2 favorites]
Response by poster: The rooms in the front of the house already have windows and are already bedrooms.
Not sure what you're going for quoting me saying that basement footage isn't without value, even if it's not one to one with above grade footage then quoting the article saying the same.
I am loathe to continue to thread sit but if anyone who either a) has expertise or b) wants to do anything beyond question easily verified aspects of the premise wants to comment, that might be super cool.
posted by DirtyOldTown at 9:02 PM on September 20, 2023 [4 favorites]
Not sure what you're going for quoting me saying that basement footage isn't without value, even if it's not one to one with above grade footage then quoting the article saying the same.
I am loathe to continue to thread sit but if anyone who either a) has expertise or b) wants to do anything beyond question easily verified aspects of the premise wants to comment, that might be super cool.
posted by DirtyOldTown at 9:02 PM on September 20, 2023 [4 favorites]
There are a bunch of homes in my area built like you describe, and I don't think a real estate appraiser would be much moved by the modifications you suggest were they done to one of them. Generally speaking appraisals (as far as I know from having known a couple of appraisers) basically boil down to comparables and the appraiser's experience with similar homes in the area, not some kind of mindless robot-like evaluation of loopholes/rules.
Now, if the home were the only one of its kind in the area, that might allow for a bit more movement but I am not myself an appraiser so that's beyond my limited understanding of how it works.
posted by axiom at 9:47 PM on September 20, 2023 [3 favorites]
Now, if the home were the only one of its kind in the area, that might allow for a bit more movement but I am not myself an appraiser so that's beyond my limited understanding of how it works.
posted by axiom at 9:47 PM on September 20, 2023 [3 favorites]
Totally agree that the basement level has value. I just don't see where unburying does anything real for that value just by increasing the square footage number. Maybe what you're getting at is "would people prefer a totally exposed 2-story house over one with a half-buried story" and I can see where that is possible and maybe even likely, and that would increase your value. Note that this is definitely all hypothetical, because unburying your basement would remove the protection from frost heave that the basement is there for in the first place - so you'd have to underpin the foundation along the front wall by 3-4 feet to get that protection back.
I quoted you because you said it would be going from basement to traditional living space - that made me think it's currently not traditional living space or legally able to be used as bedrooms or what have you (i.e. they're called bedrooms or used that way but don't have an egress window - common in the Midwest and referred to as "non-conforming bedrooms").
I then quoted the article because it said that the finished basement is in fact included in the value of the home that has it for the listing, and that "homes are not generally priced strictly on square footage".
Expertise: amanda and I are both in the architectural profession. I personally worked in residential design for a decade and lived in the Midwest for 8 years.
posted by LionIndex at 9:49 PM on September 20, 2023 [7 favorites]
I quoted you because you said it would be going from basement to traditional living space - that made me think it's currently not traditional living space or legally able to be used as bedrooms or what have you (i.e. they're called bedrooms or used that way but don't have an egress window - common in the Midwest and referred to as "non-conforming bedrooms").
I then quoted the article because it said that the finished basement is in fact included in the value of the home that has it for the listing, and that "homes are not generally priced strictly on square footage".
Expertise: amanda and I are both in the architectural profession. I personally worked in residential design for a decade and lived in the Midwest for 8 years.
posted by LionIndex at 9:49 PM on September 20, 2023 [7 favorites]
Response by poster: I guess the question might be framed a little differently: is there either a perceived value hike in having all square footage above grade or a sort of witless algorithm bump from that, such that doing something objectively ludicrous like modifying the grade level to reclassify square footage would change asking price?
I mean, yes, I am aware many people see value in finished basement space and find the distinction ridiculous. I bought this house after all.
There is a house a block away from me that is a model that seems to have begun life as a raised ranch a bit like mine (though with different dimensions and floorplan) . And yet, it has been modified to be entirely above grade. (Although, I highly doubt it was done to change the square footage calculations. They also changed it aesthetically, adding an all red brick exterior... which may relate to Lionindex's point about structural changes...)
Anyway, that house seems to list a fair bit higher higher than more nicely appointed versions of the identical design that are still partly basement. Theoretically that could be anything, but without breaking down the entire property, trust me when I say the only thing that stands out is that this particular house is entirely above grade. Or maybe it's that brick. Who knows.
posted by DirtyOldTown at 10:10 PM on September 20, 2023
I mean, yes, I am aware many people see value in finished basement space and find the distinction ridiculous. I bought this house after all.
There is a house a block away from me that is a model that seems to have begun life as a raised ranch a bit like mine (though with different dimensions and floorplan) . And yet, it has been modified to be entirely above grade. (Although, I highly doubt it was done to change the square footage calculations. They also changed it aesthetically, adding an all red brick exterior... which may relate to Lionindex's point about structural changes...)
Anyway, that house seems to list a fair bit higher higher than more nicely appointed versions of the identical design that are still partly basement. Theoretically that could be anything, but without breaking down the entire property, trust me when I say the only thing that stands out is that this particular house is entirely above grade. Or maybe it's that brick. Who knows.
posted by DirtyOldTown at 10:10 PM on September 20, 2023
Response by poster: Anyway, sorry I was a crank above.
posted by DirtyOldTown at 10:38 PM on September 20, 2023
posted by DirtyOldTown at 10:38 PM on September 20, 2023
If that house also sells for significantly more than a half-buried one, you’ve answered your own question.
posted by plonkee at 11:36 PM on September 20, 2023 [1 favorite]
posted by plonkee at 11:36 PM on September 20, 2023 [1 favorite]
Where I live, basement square footage is not included in the square footage for the house. It's normal and when people are looking for a house they know this (or their realtor should tell them). We have a huge basement (2 windows but no door) and it definitely added to the overall sales price. I know this because our house has historically sold for way more than our neighbors that have the same square footage and other stats (4 BR, 4 BA).
So no, I don't think that "unburying" a portion of your house will increase your house value and I don't think it will become a 2 story house. Even if you could market it as a 2 story, some folks would expect a 2 story with basement.
What may help would be if you dug out a part of the basement and added an entrance. That would be worth some $. People will pay for that and for more basement square footage. Also, if removing the dirt also makes the basement seem less basement-y that may help overall. But in and of itself, the unburying is not increasing the value.
posted by jraz at 4:17 AM on September 21, 2023 [3 favorites]
So no, I don't think that "unburying" a portion of your house will increase your house value and I don't think it will become a 2 story house. Even if you could market it as a 2 story, some folks would expect a 2 story with basement.
What may help would be if you dug out a part of the basement and added an entrance. That would be worth some $. People will pay for that and for more basement square footage. Also, if removing the dirt also makes the basement seem less basement-y that may help overall. But in and of itself, the unburying is not increasing the value.
posted by jraz at 4:17 AM on September 21, 2023 [3 favorites]
Where I've lived, "living" space in a basement is definitely counted towards the total in ads, regardless of how the county assessor might calculate things. So a split level or "raised ranch" house like yours would be listed with both upstairs and downstairs square footage. (Ads list all kinds of things that aren't quite legit, like saying it is a four bedroom house but then mentioning that one of those isn't a legal bedroom, whereas typically the listing with the assessor is more limited to the correct legal descriptions.)
That is a bit separate from the question of if you either did a bunch of earthworks to lower the ground around your house or jacedk it up and put a new, higher foundation underneath, would that raise the value of your house? I'd say "maybe," just because it's also possible you'd end up with a weird, awkward layout -- a layout that seems fine with the top floor is half a flight up might seem odd when that top floor is a full story above the entry, for example. So bigger changes in addition to the excavating/lifting might be needed to end up with a high-value house.
posted by Dip Flash at 5:29 AM on September 21, 2023 [2 favorites]
That is a bit separate from the question of if you either did a bunch of earthworks to lower the ground around your house or jacedk it up and put a new, higher foundation underneath, would that raise the value of your house? I'd say "maybe," just because it's also possible you'd end up with a weird, awkward layout -- a layout that seems fine with the top floor is half a flight up might seem odd when that top floor is a full story above the entry, for example. So bigger changes in addition to the excavating/lifting might be needed to end up with a high-value house.
posted by Dip Flash at 5:29 AM on September 21, 2023 [2 favorites]
I'm going to be an annoying pedant... or maybe point out three relevant and interesting things that you haven't thought of.
1) Where do your water and sewer services enter the house, and how deeply are they buried? I live in a place with cold winters, and if your profile location is correct, I see that you do too (though not as cold as mine). Entry of water and sewer services is one of the main reasons that houses have basements in my location. These pipes need to be buried deeply enough that when the ground freezes in the winter, it doesn't reach and freeze the pipes. These services usually enter houses from the side facing the street, since the mains are normally buried under the street. Daylighting the front wall of your house would likely expose these pipes to freezing.
2) The portion of the foundation below grade generally does not have exterior insulation. The portion above grade usually does. Daylighting that wall is going to require insulating and parging the entire face, or your home's comfort level and energy costs will be greatly modified.
3) How does rainwater currently drain around the front of your house? Is the ground slightly sloped so that water runs away from your foundation? Digging a big trench will regrade the land such that water runs up against your wall. This can lead to water infiltration, damaging your foundation and causing mould issues in your walls, and it will happen every time there's a significant rainstorm or snowmelt.
All three of these things would significantly detract from the resale value of your house, possibly even to the point of rendering it a "tear-down".
posted by heatherlogan at 5:43 AM on September 21, 2023 [6 favorites]
1) Where do your water and sewer services enter the house, and how deeply are they buried? I live in a place with cold winters, and if your profile location is correct, I see that you do too (though not as cold as mine). Entry of water and sewer services is one of the main reasons that houses have basements in my location. These pipes need to be buried deeply enough that when the ground freezes in the winter, it doesn't reach and freeze the pipes. These services usually enter houses from the side facing the street, since the mains are normally buried under the street. Daylighting the front wall of your house would likely expose these pipes to freezing.
2) The portion of the foundation below grade generally does not have exterior insulation. The portion above grade usually does. Daylighting that wall is going to require insulating and parging the entire face, or your home's comfort level and energy costs will be greatly modified.
3) How does rainwater currently drain around the front of your house? Is the ground slightly sloped so that water runs away from your foundation? Digging a big trench will regrade the land such that water runs up against your wall. This can lead to water infiltration, damaging your foundation and causing mould issues in your walls, and it will happen every time there's a significant rainstorm or snowmelt.
All three of these things would significantly detract from the resale value of your house, possibly even to the point of rendering it a "tear-down".
posted by heatherlogan at 5:43 AM on September 21, 2023 [6 favorites]
I think heatherlogan makes some good points about water; what is down there below grade may matter a little or a lot. It's possible that excavating would be a very bad idea. On the other hand, it's conceivable that excavating could be done in such a way to improve the drainage situation.
I came in to comment on this: witless algorithm bump. I feel very comfortable claiming that Zillow et al would give you a bump the day you added those square feet. It's even possible a human appraiser would bump it up too, if somehow it made the house look better from the front, or freed up some yard space, or solved a drainage problem, etc.
Whether it matters in an actual sale is unclear, I'd lean toward saying it would help in the case that your house type is not super common in your area, so that people don't accidentally rule it out for being too small.
But from all fronts, if there are many houses like yours within a few miles, I think this excavation fails to add value, even as a thought experiment where everything goes smoothly and there is no down side.
posted by SaltySalticid at 6:45 AM on September 21, 2023
I came in to comment on this: witless algorithm bump. I feel very comfortable claiming that Zillow et al would give you a bump the day you added those square feet. It's even possible a human appraiser would bump it up too, if somehow it made the house look better from the front, or freed up some yard space, or solved a drainage problem, etc.
Whether it matters in an actual sale is unclear, I'd lean toward saying it would help in the case that your house type is not super common in your area, so that people don't accidentally rule it out for being too small.
But from all fronts, if there are many houses like yours within a few miles, I think this excavation fails to add value, even as a thought experiment where everything goes smoothly and there is no down side.
posted by SaltySalticid at 6:45 AM on September 21, 2023
My dad was a real estate agent and there were definitely more than a few informal bring-your-kid-to-work days. I absorbed a bit, even if it's a bit hazy.
witless algorithm bump
But real estate appraisers don't just use an algorithm. Yes, there are numbers that get plugged in and there is some math involved, but like all appraising, there is a bit of subjectivity thrown in - an addition to a house that is seamless will add more value than an addition the same size that was cheaply done and stands out. Square footage matters, but so does number of bedrooms, the number of rooms, the number of windows, the flooring, the ceiling height, etc.
And my dad measured people's basements too, just like he measured every room in the house. And he noted if a basement was finished or unfinished, or partially finished - and if partially finished, he got measurements for each part. So all this would do would take square footage from your basement, and add it to your house. That might change in your state the square footage you're legally allowed to put on the listing, but I don't think it would change the value considerably. It would likely make the job of the appraiser easier though - the hardest jobs for my dad were houses where there was some slightly unusual feature (like a finished "basement" mostly above grade with windows and bedrooms) that he knew made the house more valuable than the typical calculation. Thankfully, appraising isn't a science, and there is wiggle room to take into account the variation of housing.
Whatever value that may add would likely be much less than the cost of doing the job. My dad has stated several times that any home improvement rarely adds the cost of the job - if you spend 10k on home improvements, it won't raise the value of the house by 10k, unless that 10k was spent in supplies and you did the labor yourself.
posted by coffeecat at 7:27 AM on September 21, 2023
witless algorithm bump
But real estate appraisers don't just use an algorithm. Yes, there are numbers that get plugged in and there is some math involved, but like all appraising, there is a bit of subjectivity thrown in - an addition to a house that is seamless will add more value than an addition the same size that was cheaply done and stands out. Square footage matters, but so does number of bedrooms, the number of rooms, the number of windows, the flooring, the ceiling height, etc.
And my dad measured people's basements too, just like he measured every room in the house. And he noted if a basement was finished or unfinished, or partially finished - and if partially finished, he got measurements for each part. So all this would do would take square footage from your basement, and add it to your house. That might change in your state the square footage you're legally allowed to put on the listing, but I don't think it would change the value considerably. It would likely make the job of the appraiser easier though - the hardest jobs for my dad were houses where there was some slightly unusual feature (like a finished "basement" mostly above grade with windows and bedrooms) that he knew made the house more valuable than the typical calculation. Thankfully, appraising isn't a science, and there is wiggle room to take into account the variation of housing.
Whatever value that may add would likely be much less than the cost of doing the job. My dad has stated several times that any home improvement rarely adds the cost of the job - if you spend 10k on home improvements, it won't raise the value of the house by 10k, unless that 10k was spent in supplies and you did the labor yourself.
posted by coffeecat at 7:27 AM on September 21, 2023
Mod note: Comment removed. Please just stick to answering the OP's question and avoid snarky replies, thanks!
posted by Brandon Blatcher (staff) at 7:32 AM on September 21, 2023
posted by Brandon Blatcher (staff) at 7:32 AM on September 21, 2023
If you have the address of the house in question that you think did this modification, you can the digging though public records about it. Most are online and easy to find. Things like sales records and tax assessments and square footage. That should give you an idea of the actual things that are affecting value and if the square footage has been updated at any point or the house has gone though some sort of major modification.
If they did this, they may have done a lot of other things to also update the house’s value like a kitchen remodel or something. If it’s sold before you may be able to find old listing photos or something too.
Generally, I can’t fathom the cost or if it’s structurally feasible to do what you suggest, given the things pointed above. And if it were, then I think the cost would be so extreme it would never balance out on a return of value increased. I think if we are thinking magically, then snapping our fingers for more daylight or a lower entrance or a more appealing exterior could of course change value but I don’t know how much that value equates to officially assessed square footage.
I’m also from somewhere that’s lists the full space square footage and non compliant bedrooms on real estate listings. But ours is going to be more “valuable” than others because our basement is finished. I think the county tax assessment separates it by floor or grade, but I don’t know how that affects value versus capturing the footprint of the home vs the lot size.
ETA I don’t have any specific expertise besides buying recently and always enjoying housing stuff. But I didn’t see anyone bring up looking at public records to compare.
posted by Crystalinne at 8:38 AM on September 21, 2023
If they did this, they may have done a lot of other things to also update the house’s value like a kitchen remodel or something. If it’s sold before you may be able to find old listing photos or something too.
Generally, I can’t fathom the cost or if it’s structurally feasible to do what you suggest, given the things pointed above. And if it were, then I think the cost would be so extreme it would never balance out on a return of value increased. I think if we are thinking magically, then snapping our fingers for more daylight or a lower entrance or a more appealing exterior could of course change value but I don’t know how much that value equates to officially assessed square footage.
I’m also from somewhere that’s lists the full space square footage and non compliant bedrooms on real estate listings. But ours is going to be more “valuable” than others because our basement is finished. I think the county tax assessment separates it by floor or grade, but I don’t know how that affects value versus capturing the footprint of the home vs the lot size.
ETA I don’t have any specific expertise besides buying recently and always enjoying housing stuff. But I didn’t see anyone bring up looking at public records to compare.
posted by Crystalinne at 8:38 AM on September 21, 2023
The real question is when or how much does the "official" square footage of the house play a role in any other costs and/or valuations of the house?
- when you actually sell a house, the price is based on the negotiated price between the buyer and seller. Presumably buyers will pay about the same amount for your current house and the "dug out" version since it has the same utility
- when you get the house appraised (usually as part of the purchase process to satisfy the bank) appraisers do start out with the official square footage but they also have ways to adjust the value to reflect when your home offers more or less than the standard home with the same statistics. If this type of split level is common, appraisers should be able make the adjust pretty easily. If it is unusual, there is a chance that it could appraise for less than what a buyer would pay given it's usual value
- listings by real estate agents to get buyers to even look at the house - might be a disadvantage but a good agent could compensate in the listing and via word of mouth
- for insurance valuation - this might be worth check out to make sure the insurance would fully cover the cost of rebuilding to the quality that you have
- for tax reasons - depends on how your local taxes are calculated but being undervalued is actually to your benefit
in summary, a valuation based on official square footage can happen and can be a minor drag on attempts to sell (for example your zillow listing estimates the house for significantly less than it is worth or a calculation of $/sq feet shows your house as overpriced) but in the places that it counts it shouldn't make much difference.
posted by metahawk at 9:34 AM on September 21, 2023 [2 favorites]
- when you actually sell a house, the price is based on the negotiated price between the buyer and seller. Presumably buyers will pay about the same amount for your current house and the "dug out" version since it has the same utility
- when you get the house appraised (usually as part of the purchase process to satisfy the bank) appraisers do start out with the official square footage but they also have ways to adjust the value to reflect when your home offers more or less than the standard home with the same statistics. If this type of split level is common, appraisers should be able make the adjust pretty easily. If it is unusual, there is a chance that it could appraise for less than what a buyer would pay given it's usual value
- listings by real estate agents to get buyers to even look at the house - might be a disadvantage but a good agent could compensate in the listing and via word of mouth
- for insurance valuation - this might be worth check out to make sure the insurance would fully cover the cost of rebuilding to the quality that you have
- for tax reasons - depends on how your local taxes are calculated but being undervalued is actually to your benefit
in summary, a valuation based on official square footage can happen and can be a minor drag on attempts to sell (for example your zillow listing estimates the house for significantly less than it is worth or a calculation of $/sq feet shows your house as overpriced) but in the places that it counts it shouldn't make much difference.
posted by metahawk at 9:34 AM on September 21, 2023 [2 favorites]
The real question is when or how much does the "official" square footage of the house play a role in any other costs and/or valuations of the house?
It does not. The last three homes I've been involved in buying had square footage different than what the listing said. One had a non-permitted back room would could not be counted, another involved the developer sending incorrect square footage to the county, and another the seller's agent just fat fingered the number when putting the listing into MLS.
Want to know the combined price differential after the numbers were corrected across all three properties: Exactly $0
The sellers all (correctly) declared the price is the price. Buy it or not. Whining about "well, such and such property is 100 square feet bigger and sold for X" would have gotten me a "well, guess you should have bought that one then".
posted by Back At It Again At Krispy Kreme at 10:53 AM on September 21, 2023
It does not. The last three homes I've been involved in buying had square footage different than what the listing said. One had a non-permitted back room would could not be counted, another involved the developer sending incorrect square footage to the county, and another the seller's agent just fat fingered the number when putting the listing into MLS.
Want to know the combined price differential after the numbers were corrected across all three properties: Exactly $0
The sellers all (correctly) declared the price is the price. Buy it or not. Whining about "well, such and such property is 100 square feet bigger and sold for X" would have gotten me a "well, guess you should have bought that one then".
posted by Back At It Again At Krispy Kreme at 10:53 AM on September 21, 2023
My guess is that digging out the foundation would not have an effect on the claimed square footage, and that the only way to change that is to tear down the house and rebuild it above ground as a 2 story.
I wonder if not counting the lower level in a raised ranch might have something to do with real estate taxes? The Chicago area is known to have some screwy-assed methods for calculating home values.
The first house I owned was in a subdivision in Streamwood that had a mix of ranch homes (usually without basements) and raised ranches. I went up on Zillow and picked one of each in that subdivision to do a little test.
The ranch home listed at 975 sq ft, with an estimated value of $256k and 2021 tax of $5,370. The raised ranch next door is listed at 1,098 sq ft, estimated value $273,700 and 2021 tax $5,504. Roughly same size footprint, but twice as much house.
My conclusion is that square footage doesn’t have as much meaning when pricing a house for sale as home type and number of bedrooms and baths, but not counting lower floor living space is beneficial for lower real estate taxes.
posted by SteveInMaine at 12:45 PM on September 21, 2023 [1 favorite]
I wonder if not counting the lower level in a raised ranch might have something to do with real estate taxes? The Chicago area is known to have some screwy-assed methods for calculating home values.
The first house I owned was in a subdivision in Streamwood that had a mix of ranch homes (usually without basements) and raised ranches. I went up on Zillow and picked one of each in that subdivision to do a little test.
The ranch home listed at 975 sq ft, with an estimated value of $256k and 2021 tax of $5,370. The raised ranch next door is listed at 1,098 sq ft, estimated value $273,700 and 2021 tax $5,504. Roughly same size footprint, but twice as much house.
My conclusion is that square footage doesn’t have as much meaning when pricing a house for sale as home type and number of bedrooms and baths, but not counting lower floor living space is beneficial for lower real estate taxes.
posted by SteveInMaine at 12:45 PM on September 21, 2023 [1 favorite]
SteveInMain is getting precisely at what I was getting at with my questions. As for expertise, (high-five, LionIndex) yes, my entire professional life is currently mired in the vagaries of residential design & remodeling and I get questions frequently from my clients about the value of any one thing over another and the reason I was perfunctory in asking so many questions is that these are the questions that need to be asked in order to help you come to an actionable conclusion. Now, I'm not in Illinois and I don't see that in your question so I'm just asking the typical questions that would help to narrow down the criteria in just about any jurisdiction in the United States but without taking into consideration all the various local issues that may also be relevant, including social constructs about what is good about houses to the people in your neighborhood. It is not uncommon for the work I do, that it will have tax implications, appraisal implications and buyer/seller implications down the road. Sometimes my clients are trying to finance a thing and depending on what that thing is, other financing options might be open to them if it triggers certain valuations. It can be really, really frustrating when someone is spending a lot of money (or contemplating doing so) to not be very certain of the return on investment. But real estate is just a tricky beast and you're often weighing six of one, half a dozen of another, you know?
The best way to move forward is: How much does X cost to do? How much of a pain in the ass is it? How does it improve my living situation today and in the coming years? Can I afford it without harming my daily cash flow for necessities? Is it in line with what the neighborhood has going on? Does it change the appraisal value of my house for sale later or when I want to leverage it for financing?
posted by amanda at 9:27 AM on September 22, 2023
The best way to move forward is: How much does X cost to do? How much of a pain in the ass is it? How does it improve my living situation today and in the coming years? Can I afford it without harming my daily cash flow for necessities? Is it in line with what the neighborhood has going on? Does it change the appraisal value of my house for sale later or when I want to leverage it for financing?
posted by amanda at 9:27 AM on September 22, 2023
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If this is an unusual layout in your area, such that buyers wouldn't realize your house was twice as big as advertised, then it may be worth it.
posted by Narrow Harbor at 8:24 PM on September 20, 2023 [1 favorite]