7 Key Ways to Save on the Average Cost of a Basement Remodel

What legally qualifies as a finished basement?

For your basement remodel to legally qualify as living space, it needs to meet all of your state’s building codes or the return on your investment (ROI) will be zero. While the finer points vary between states, some building codes you’ll need to meet are universal, including:

Ceiling height

A basement must have a minimum ceiling height of 7 feet in order to be considered living space. If your basement ceiling height is lower than 7 feet, it cannot qualify as living space even if it is remodeled.

True, you could take the drastic step of digging out your basement to gain the needed ceiling height, but this is an expensive endeavor. Lowering the floor by one to two feet costs $40,000 to $90,000.

However, the International Residential Code (IRC), which governs both new build and remodel residential construction, does allow some leeway for beams and ducts, which are likely to impact a basement remodel.

Egress (aka emergency exit access)

Do not finish your basement without considering emergency egress. The IRC fire code states that the window must:

• Be positioned no more than 4’4” from the floor to the lower sill
• Be a minimum of 20” wide
• Open to a minimum of at least 24” in height

If your windows aren’t the proper size to meet the fire code requirements, there’s a high likelihood that it’s going to be called out during the home inspection. Your buyers will then either insist that you fix the emergency egress issue, or they’ll walk away.

Even if your house is older and was built before the basement egress building codes were written, its finished basement must meet current IRC fire code requirements for emergency egress to qualify as legal living space.

For example, the code in New York changed in 2016 to require newly built homes to all have an egress window in basements.

“The problem is that a lot of people with older homes finished their basements without ever getting a permit because they didn’t want to be taxed on the additional livable square footage, which was common practice,” explains Marchesiello.

“But it’s just started coming to light that all those finished basements in older homes don’t have proper egress, which means that they cannot legally qualify as finished. Home inspectors are calling out these improperly finished basements and in the most extreme cases, they’re having to actually rip them out.”

FYI, basement square footage is worth less

It’s easy to get excited about the amount of square footage you’ll add to your home when you remodel your basement, but don’t start counting your money yet. Basement square footage is below grade, which means it’s not valued at the same rate that the above-ground square footage of your home is valued.

“Many sellers who have, say, a 2,000 square foot house above ground and a 1,000 square foot finished basement want to list the house at 3,000 square feet, but that’s not how it works. Multiple listing services (MLS) require that we separate above-ground square footage from below-grade square footage,” explains Marchesiello.

“And you can’t price it as if it’s a 3,000 square foot house either, even if it’s a semi-basement that’s only half-underground. It’s still below-grade square footage, which is valued at about half of what the above-ground square footage is worth.”

Cost and return on investment (ROI) of a typical 1,000-square-foot basement remodel

With a clear understanding of how to calculate the value a basement remodel will add to your home, it’s time to dig into just how much that remodel will cost you.

The best way to determine how much your basement remodel will cost is to consult a contractor who’s experienced in basement remodel construction. A ballpark estimate on a 1,000-square-foot basement indicates you’ll pay around $7,000 to $23,000.

Alternatively, you can calculate that a basement remodel will run between $30 and $100 per square foot.

While basement remodels do increase your home’s overall value, Angi estimates an ROI of approximately 64% to 70%.

7 ways to save on your basement remodel

It’s never a good idea to cut corners in ways that violate those building codes. You’ll only cost yourself money in the long run. Any basement remodel work that you’ve done incorrectly will either need to be repaired or torn out before you sell.

However, that doesn’t mean you need to choose the most expensive estimate. There are plenty of ways to save on your basement remodel without sacrificing quality or finish.

1. Opt for an inexpensive, prefabricated egress window and well

If your basement remodel project requires the installation of emergency egress windows, it’s going to cost you $2,714 to $5,884.

This gets pretty pricey depending on how many egress windows your basement needs. According to the IRC Emergency Escape and Rescue Requirements (R310.1), a finished basement that’s one large, open living space requires one egress window. But if you’re adding any bedrooms in your basement remodel, each one is required to have it’s own egress window.

While the national average is around four grand, this is in part because homeowners typically want to install custom egress windows mirroring the materials and design of the house.

However, as long as your egress windows are located on the side or back of your house, they won’t compromise its curb appeal. If that’s the case, you can lower costs by purchasing prefabricated egress windows.

Prefabricated egress windows start at $600, and a designer window well sells for around $700. Add in the labor cost of installation, which averages $40 to $100 per hour or $100 and $1,000 per window, and you can bring your total cost down to around $1,500 to 2,500 per egress window.

2. Test exterior walls for moisture before finishing

Basements have a reputation for being damp, moldy, and musty for a reason. Groundwater from rain or melting snow can seep in from the walls and the floors, and some houses have interior moisture sources as well.

Even if your basement walls don’t seem damp and you’ve never had an issue with mold or water damage, you could run into moisture issues if you don’t test for it first.

You can DIY this test with a roll of duct tape and aluminum foil or plastic wrap. Simply tape up a square, leave it for 24 hours, and then check to see if it’s damp. If it’s dry, you’re good to go.

If it’s collected moisture, you need to deal with the issue before finishing your walls. Luckily, walls that fail a moisture test, but feel dry to the touch can usually be fixed with a coat of sealant, like masonry waterproofer for around $160.

For a home that has a major moisture issue, it’ll cost anywhere between $3,000 and $10,000 to properly inspect and waterproof your basement, depending on the severity of the issues.

Don’t give in to the temptation to paint or drywall over your basement cement and leave the dampness be. Mildew and mold develop within 24 to 48 hours after water exposure. And if you ever sell your home and the buyer can prove that you failed to disclose known moisture issues in your basement or deliberately concealed them, they can sue you over it.

3. Cut out some studs

When your basement remodel plans include adding rooms, like an extra bedroom, study, or bathroom, you’ll need to build some walls to divide the space. The standard cost to frame basement walls runs between $500 and $1,600.

The good news is that these walls won’t be load-bearing. Since they don’t hold up the house above, you can choose to reduce the number of studs in those walls to save money.

Load-bearing walls require studs placed every 16 inches. However, non-loadbearing allows for studs placed every 24 inches. In an 8-foot wall, that reduces your number of required studs from six to four.

There’s also evidence that fewer studs in your walls will reduce your energy costs by reducing thermal bridging. Essentially, each stud acts as a temperature conductor, drawing outdoor summer heat and winter cold into your house. The fewer studs in your walls, the more energy-efficient your home will be.

A stud only costs between $3 to $6 each, but you’re also saving on labor and other construction costs. Advanced framing doesn’t just reduce remodeling costs, it minimizes wood waste, too, which helps the planet.

4. Install drop ceilings

Spend any time staring at office ceilings, and you’re probably automatically turned off at the idea of having anything even remotely similar in your home. But counting them out when you’re refinishing your basement is a mistake.

Drop ceilings are a great option because they give basement ceilings a finished look and allow access to plumbing and wiring. This is where your cost savings come in.

Most homes with basements run plumbing and electrical systems under the floors, which is your basement’s ceiling. If you drywall over your floor joists to create your basement’s ceiling, you’ll need to cut into it whenever you need access to those pipes and wires unless you add access panels.

Drywall installation on the ceiling costs $1.50 to $3.50 per square foot, while drop ceiling installation runs between $9 and $13 per square foot.

Material costs are where the real difference comes in. Drywall is priced at $0.40 to $0.65 per square foot. Drop ceiling tiles range anywhere from $1 to $70 per square foot — and you don’t want to completely cheap out.

“Spend a little bit of extra money for higher-end drop ceiling tiles rather than the boring office space tiles. They have a more expensive look which can only increase your finished basement’s added value,” advises Marchesiello.

Designer-look tiles don’t have to be expensive. You can get beveled panels for just $1.41 per square foot or modern, textured tiles for $2.49 per square foot.

5. Skip the carpet and use luxury vinyl tile instead

Carpet may be embraced on the floors of cozy above-ground bedrooms, but it isn’t a welcome sight on the floor of basement bedrooms. Since basements are known for their moisture issues, buyers see basement carpeting as a breeding ground for future problems.

“Definitely don’t carpet your finished basement. The best kind of flooring for the basement by far is luxury vinyl tile, which is a high-quality vinyl plank,” advises Marchesiello.

Some people turn up their noses at the idea of vinyl flooring, but this isn’t your grandma’s busy brown vinyl sheet flooring. Luxury vinyl tile (LVT) is high-end flooring designed to convincingly mimic the look of expensive hardwood, stone, or ceramic tiles, while maintaining the durability of vinyl all at a more affordable cost. You can get quality wood look LVT priced as low as $1.99 per square foot.

If you’d really rather have carpet, at least in the bedrooms, you’re not completely out of luck. You can install a moisture barrier padding underneath your carpet to keep it fresh and dry for around $1 a square foot.

6.  Add a bathroom (or at least a half bath) near the existing plumbing

“Any time you add another bathroom or even a half bath, you’re upping the value of the property significantly,” says Marchesiello.

If you’re building on a bathroom as an addition at above-ground grade, it’s simply not a cost-effective project. It can range from $5,000 to $75,000.

However, installing a modest basement bathroom near existing plumbing is much more affordable, costing $10,000 and $15,000 on average.

7. Designate some storage space

Don’t get so carried away with your basement remodel project that you forget its primary purpose. Basements are the prime storage space in most homes for belongings that aren’t used everyday, like holiday décor, seasonal clothing, or outdoor furniture.

“A common mistake sellers make is that they gorgeously finish the entire basement without leaving storage space, which leads to many buyers walking away no matter how nice the basement looks. So, I tell my sellers to leave at least one-third of the unfinished space for storage,” explains Marchesiello.

Carving out an area to leave unfinished for storage is a huge money saver because it reduces the square footage of your remodel. Instead of remodeling your whole 1,500 square-foot basement, you can just build a wall to separate 500 square feet of unfinished basement for storage and only pay to finish the remaining 1,000 square feet.

Remodel for you, not just the added resale value

Before beginning a time- and money-intensive basement remodel project, do the math to figure out if it’s affordable and profitable.

“Unless there’s a clearly defined plethora of comparables indicating that a house with a finished basement will sell for significantly [more] money in your area, then don’t spend money on finishing it just to sell it,” advises Marchesiello.

“But sometimes it’s not all about the resale value. If you really want a finished basement, make it part of your two- to five-year plan so you can enjoy it for several years before you sell.”

If you do decide that the average cost of a basement remodel is worth it for your home, have fun with it and create a basement space for the whole family to enjoy, like an in-home theatre, a wine cellar, or even a gym.

If you’re planning to sell soon, team up with a local realtor for expert advice on maximizing your sale profits through smart home upgrades. Get started by connecting with an agent today.

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