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

Time for a basement facelift! Maybe you hope to turn your dank, dark storage space into a home office, add a bedroom, or revamp your fully finished entertainment space. Goodbye wood paneling and shag carpeting — you won’t be missed.

Now, it’s just a matter of budgeting. The average cost of a basement remodel can run you anywhere from $5,000 to $70,000. That’s quite a range… and definitely no small chunk of change. But your costs will vary depending on how much work your basement needs, the size of your space, and your vision for transforming it. And done right, this project will make your house more marketable.

“A properly finished basement definitely adds value,” advises Christine Marchesiello, a top-selling real estate agent located in the Albany, NY area. “When done legally, it’s an affordable way to add value to your home because it increases the square footage without all the work required to put an addition on the home. The space is already there, you just have to install sheetrock, add flooring, paint, and a little décor and design.”

With this guide to basement remodel costs, we’ll break down the elements your basement needs to be considered legal and help you identify key opportunities to save money so that you can maximize your investment.

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

In order for a basement to be considered living space, it must have a minimum ceiling height of 7 feet. If your basement ceiling heights are lower than 7 feet, then it cannot qualify as living space even if 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. Just getting the architectural designs to lower your basement floor will run you between $3,000 to $4,000. And getting it dug out to lower the floor by two feet will cost between $350 and $450 per linear foot.

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 yours is an older house built before the basement egress building codes were written, your 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 ROI of a typical 1,000 square-foot basement remodel

With a clear understanding on 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 $8,000 for a DYI remodel, and around $15,000 for a professional remodel.

Alternatively, you can calculate that a basement remodel will run you between $32 to $47 per square foot.

Expect to pay several grand more for every one of these projects that your basement remodel includes:

• the installation of new emergency egress windows
• water damage remediation or foundation repair
• new bathroom construction
• erection of non-foundational walls
• interior door installation

While basement remodels do increase your home’s overall value, according to Remodeling Magazine’s Cost vs. Value Report, you can expect to recoup around 70% of the money you invest in the project.

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 just 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 opt for the most expensive estimate you get. There are plenty of ways that you can economize 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 an average of $3,750 per each egress window.

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 close to four grand, this is in part because homeowners typically want to install custom egress windows that mirror 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 run around $600 to $700, and an economy window well sells for around $500. Add in the cost of installation which runs as low as $900, and you can bring your total cost down to around $2,000 per egress window.

2. Test exterior walls for moisture before finishing

Basements have a reputation of 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 in your basement, 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 any 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 $100.

For a home that has a major moisture issue, it’ll cost anywhere between $3,324 – $11,748 to properly inspect and waterproof your basement, depending on the severity of the issues.

Don’t give into the temptation to paint or drywall over your basement cement and leave the dampness be. Mildew and mold develops 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 throw up some walls to divide the space. The standard cost to frame basement walls runs between $931-$1,781.

The good news is that these walls won’t be load bearing. Since these walls have no role in holding up the house above, one of the easiest ways to save money is by reducing the number of studs in those walls.

Load-bearing walls require studs placed every 16 inches, however, non-loadbearing allow 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, potentially reducing your energy costs by up to 5%.

A stud only costs between $5 to $7 each, but you’re also saving on the labor and other construction costs. Advances in framing won’t just save you on your remodel costs, it’ll save on 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, but still allow access to plumbing and wiring — and that’s where your cost savings comes 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 every time you need access to those pipes and wires, unless you add access panels.

Overall, the installation costs for both are comparable. Installing drywall on the ceiling will run you between $2.25 to $3 per square foot and drop ceiling installation runs between $2 to $5 per square foot.

Material costs are where the real difference comes in. Drywall is relatively inexpensive at $326 to $526 total per every 200 square feet. Drop ceiling tiles and grid rails range anywhere from $1 to $23 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. While the speckled office tiles run as cheap as $.59 per square foot, you can get beveled panels for just $1.37 per square foot, or modern, textured tiles for $1.98 per square foot.

5. Skip the carpet and install 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 basement by far is called 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 $1.44 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 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:

However, installing a modest basement bathroom near existing plumbing is much more affordable. For a basic 30 to 50 square foot bathroom, expect to budget around $15,000 on average.

7. Remember to 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 2-5 year plan, so that 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.

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