The Lure of a Basement can Help Hook Home Buyer
Extra Space, Whether Storage or Living, A Boon for Sellers

By Margaret Steen
San Jose Mercury News
August 11, 2007

When Zoe Banchieri puts her 1925 house on the market, she’s hoping it will stand out from the other 1,800­square­foot houses in Union City. Her secret weapon? A 600­square­foot basement.

Banchieri and her husband use the basement for storage, workbenches and a freezer. Because the basement isn't finished as living space, it’s not included in the home’s square footage. But Banchieri knows from her friends' reactions to seeing her basement in the nine years she's lived in the house that many Bay Area residents yearn for an out­of­sight storage area.

“We live in a time where everybody has stuff,” said Banchieri, who is hoping to move up to a larger house soon with her husband and two children. “I ’ve had a lot of people tell me, ‘I wish I had a place like that.’ ”

Unlike in other parts of the country, basements are relatively rare in the Bay Area. But some older houses, like Banchieri’s, do have them. And they are growing in popularity in high­end new construction homes.

“People want more space, and they’re finding that by going down,” said Michael Dreyfus, broker of Dreyfus Properties in Palo Alto.

Older basements, like Banchieri’s, are often unfinished and generally not considered living space. “Mostly I find them on Victorian homes in downtown San Jose,” said Lyle Standish, a home inspector in San Jose. Some have ladders going down to them; others have a set of stairs either inside the house or outside. The ceilings are often lower than what is required for living space, Standish said.

But in higher­end homes, especially new construction, finished basements are becoming a popular way to gain living space without running afoul of cities’ restrictions on how large a home can be built on a given lot. Those restrictions generally look only at square footage above ground.

“ ‘Basement’ has this East Coast connotation as this damp, dark storage place,” said Gary Herbert, an agent with Coldwell Banker in Los Altos. He built a home with a finished basement for himself and a second to resell in Los Altos. “I call them lower levels.”

The five-bedroom home Herbert sold was 3,700 square feet, half above ground and half below. Without going underground, he would have been restricted to 2,300 square feet, including the garage.

Not your Mother’s Basement

“I think some people go in with a thought that, ‘Oh, it’s a basement,’ ” Herbert said. “But when they go into these new basements that are designed right, they say, ‘Oh, this isn’t your mother's basement.’ ”

Experts say these newer, more finished basements have been getting more common in the past decade, though they still are not the norm. These high­end basements have higher ceilings than in the past. Many have bathrooms, and some open onto patios dug into the back yard. Some people build garages underground, though cities' requirements don’t always allow this.

Not every lot lends itself to building a basement. Palo Alto, for example, “is a prime market for basements” because of city restrictions on above­ground building, said Bill Brown, president and chief executive of Bill Brown Construction. But it has a high water table, so “basement building there has a lot of complications,” he added.

Brown emphasized that building a basement is ''a heavy-construction process. It's not something to be undertaken lightly.” There's water underground, and you don't want it in your house. In addition, builders need to take safety precautions during construction to be sure the hole they're digging doesn't collapse on the workers. All this adds to the cost, which can range from $200 to $300 a square foot for a finished basement in new construction, Brown said. Digging a basement under an existing house can cost more than $350 a square foot. So does hauling away dirt and testing the soil before construction starts.

Property Values

After all the work and expense that go into a basement, how does it affect the property’s value? Much depends on whether the basement is permitted as living space, said Karen Mann, an appraiser with Mann & Associates in Discovery Bay. If so, then the rooms below ground would be about as valuable as those above, and their square footage would be included in the house's square footage.

“People will do anything to maximize their living area,” Mann said. “We don't have a whole lot of land, so we have to get pretty creative.” But not all basements are modern, finished bedrooms attached to backyard patios. Some are mostly for storage, or are finished enough for kids to use them as a play space. In these cases, the square footage isn’t included in the home’s official count. How much they affect the home's price depends on how finished they are, whether they were permitted and other factors, but they don't add as much as true living space does. In some cases, they may contribute more as a feature to attract buyers than as an addition to the price.

Rick Geha, an agent with Keller Williams in Fremont, said many buyers would react to this type of basement the way Banchieri is hoping they will to hers: This is “ free” square footage, and as long as they're happy with the idea of buying an older home, it's a plus. “Most buyers would jump on that and say, ‘Is there a way we could make this house work?’ ”

Adding Basement to Existing Home

Do you want a basement but don’t want to tear down your home and rebuild it? Its possible to dig a basement underneath an existing home.

“We do a lot of basements on older houses,” said Bill Brown, president and CEO of Bill Brown Construction.

The process is more expensive than putting a basement in when building new construction. The house has to be supported while the hole is dug and the foundation poured underneath it. But the option can make sense for people who want to preserve an older home, or who realize that current building codes would make it impossible for them to build a home like the one already on their property.

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