I’m not sure what’s in the water these days but I am receiving a growing number of emails and calls about the valuation of basement space from real estate agents so I thought I collect my thoughts and cobble together a post to point people to.

First, a few definitions for the sake of clarity and in order of depth:

At Grade Ground level
English Basement Brownstones in New York City (and perhaps elsewhere) where the first floor is partially below grade on the street side of the building and opens at grade in the rear.
Basement The area underneath a building that is partly or fully below grade.
Cellar Usually the lowest part of a building. Located below an English Basement
Sub-Cellar Rare but when exists it becomes the lowest part of a building. Located below a cellar.

The valuation of below grade space, whether its a co-op, condo or house uses the same principals we use when appraising outdoor space. I see it as an amenity “add on” because not all properties have them.

When appraising, we attempt to establish the value of the above grade space on a per square foot basis. The below grade space, ie a basement or cellar, can be viewed as a portion or percentage of the value of the above grade space – “cents on the dollar”. In other words, the value of basement area is proportional to the value of the residence that sits above it. It’s worth more in a home that is of high value than a home with a lower relative value.

“Technically” Below Grade, The “English Basement”
Many of the old brownstone floorplans in NYC public record refer to the first level as the “basement” and the floor below it as the “cellar.” That is because many brownstones were constructed with a stoop from the street to the “parlor” (2nd) floor which was the entertaining space with the highest ceiling height and most decorative detail. The first floor is usually a few steps down from the sidewalk yet it opens at grade to the rear and contains the kitchen and has the same finishes and ceiling height as the upper floors of the building. Market participants see English Basements as equivalent to the above grade space and therefore it should be included in the square footage. Here’s a recent Q & A:

Question is it legal to count basement space as part of the sq. footage when selling a town home? This particular house has a 9-ft ceilinged finished basement but no windows. My buyer wants to know for resale purposes.

Answer For suburban homes, a traditional basement is below grade and would not be included in overall square footage even if it is finished and has rooms. In NYC brownstones, the same rule applies EXCEPT a basement could be included if it is a few steps below grade in the front and opens at grade in the rear (aka “English Basement”) AND the space has the same finishes, ceiling height as the floor above and includes a key room like a kitchen. If the space isn’t considered the equivalent to living area on the floor above it is NOT included in total sq ft but adjusted for separately. In the case of a brownstone with an “English Basement”, the space below is referred to as a “cellar” and is never included in the sq ft.

Condos and Co-ops With Basements
Many ground floor loft and non-loft apartments and tenement walk-ups have direct access to the building basement. I can’t tell you how many wrought iron circular stairways I walked (aka squeezed) down while appraising ground floor co-op walk-ups with below grade space during the 1980s co-op conversion boom. It was a great way for developers/sponsors to maximize the value of underutilized space, calling them “recreation rooms” even thought they are used as bedrooms. Here’s a recent Q & A:

Question I’m the sellers broker for a ground floor duplex loft space. We are currently in contract and we marketed the space as a one bed because the lower level is used as just that. The lower level is beneath ground without windows. The appraiser tells me that the C of O for the space calls for the lower level as a recreation space not a bedroom. Should this have a significant impact on the value of the apartment. Can’t is be viewed as loft space, period. Thank you for any insights you may have.

Answer Technically, the below grade area shouldn’t be called a “bedroom” and the sqft should not be included in the total sqft in an appraisal. However it contributes value and is handled as a separate line adjustment in the appraisal. The value of the space is usually something less than the ppsf of the ground floor if there was no basement. That applies to room count as well. The logic follows that if this space was a 1st and 2nd floor duplex instead of ground floor + basement, it would be worth more, everything else being equal. I’m not sure about “significant impact” but it makes it worth less than a fully above grade similar sized space. If the selling price is consistent with that relationship of competing properties, then there should be no problem with purchase price. The appraiser problem is really what you are referring to. Unfortunately, there is nothing you can do at this point since they have already inspected the property and are impossible to contact. Hopefully it will work out.

How Appraisers (Should) Handle It
As a rule, ie Fannie Mae guidelines (page 564), appraisers can’t include below grade space in the total square footage of a building (or the room count). In other words, the location, quality and configuration of the space is viewed by consumers as something less than above grade space in the same property.

Here’s Fannie Mae’s take (May 2012):

Basement Sleeze During Boom
During the housing boom when banks and mortgage brokers (well, really everyone) lost their minds, it was quite common for unethical appraisers, working in conjunction with mortgage brokers or lenders, to include basement space in the square footage because the space opened to grade in the rear of the house and was finished. A 2-story house that was 2,000 square feet when purchased, suddenly was 3,000 square feet when subsequently refinanced.

The Math (Market Derived)
Here a some possible ways (there are always exceptions and outliers) to approach the valuation of below grade space (in order of literal depth):

English Basement No adjustment – I’ve never observed an impact on a brownstone’s “English Basement” square footage – it is simply part of the gross building area of the brownstone.
Basement 50%-75% of the above grade ppsf – In our NYC experience, below grade space, whether it is within a brownstone, co-op or condo, their basement areas are often worth 50% to 75% of the above grade space on a per square foot basis. In a typical suburban detached house, the value is often worth less than that.
Cellar 50%-75% of the above grade ppsf – A NYC cellar (located below an “English Basement”) is handled same way an actual (i.e. suburban) basement is, something like 50% to 75% of the above grade space because it is basically the same thing.
Sub-Cellar 20%-35% of the above grade ppsf – A sub-cellar (usually located below the cellar located below an “English Basement”) is usually valued at 20% to 30% of the above grade space but this obviously depends on what the market data shows.

That’s all the dirt I can think of. Hope this helps clarify things.


[Terra Logic] Understanding The Value of Manhattan Apartment Outdoor Space [Matrix] Fannie Mae Selling Gude “Appraisal Guidelines” [eFannieMae]


  1. Marc Kushner June 26, 2012 at 9:55 am

    Just to add yet another angle to an already exhaustive treatment of this complex topic, I would point out that the NYC Dept. of City Planning’s Zoning Resolution defines a Basement as “a story partly below curb level, with at least one-half of its height (measured from floor to ceiling) above curb level.” A Cellar, on the other hand, is defined as “a space wholly or partly below curb level, with more than one-half its height (measured from floor to ceiling) below curb level.”

    This technical distinction in terminology may not carry much weight outside of the Z.R. itself (at least in my experience), but what is significant is that the Zoning Resolution’s definition of “Floor Area” specifically includes basements, but excludes cellars (with the noteworthy exception of cellars that are used for “dwelling purposes” – complicating things yet further).

    Just my two cents . . .

  2. ARDELL DellaLoggia July 24, 2012 at 2:35 am

    I love this post. Would love to link over to it and talk about it when I have the time. Seattle market is crazy busy right now.

    Seattle is the first area I have worked in where everyone seems to think finished basement square feet values the same as above ground square feet. Pretty nuts really.

    I had an appraiser friend in Bucks County PA who taught me to value the property without “extras”. Extra land, a pool, a tennis court, a finished basement…all being “extras”. Then the value of all combined extras should not exceed 10% of the value without them. Loved that method.

    Here in Seattle however the market values these extras as if there is no limit. Actually most of the West Coast does that as the Beach Areas of LA did the same when I worked there.

    Sometimes the land values are so high that it still happens to fit into the 10% rule.

    • Jonathan Miller July 24, 2012 at 8:17 am

      Thanks Ardell! – It’s also one of the first amenities to be manipulated during a boom when it comes to qualifying for financing on a refi.

      I find it a bit crazy how aggressive Bucks County advertises tourism in NYC. I wonder how many people will commute there for the weekend no matter how beautiful it is?

  3. ARDELL DellaLoggia July 24, 2012 at 11:21 am

    I took a look at a recent appraisal of a split entry one of my clients bought. The interesting thing is that the homes and all of the comps appraised at time of purchase. But when they pull those same 3 other sales as comps for my sale…not a one of them shows a value equal to or above the sold price.

    I guess it’s only worth the sold price…on the day it sells at that price. 🙂

    As to your comment on the aggressive advertising, makes sense to me. They never had to aggressively advertise “come to NYC” in PA, but in reverse I would expect the advertising would need to be fairly aggressive.

    I would think dressing up like George Washington


    to re-enact Crossing the Delaware at Christmas would be a pretty hard sell. 🙂

    Reminds me of our friend Joe Ferrara whom I always think of this time of year. He lived in Washington Crossing. I lived in Newtown Borough.

  4. CHristian June 25, 2013 at 7:52 pm

    Hello & good afternoon,
    I agree with Ardell, this has to be one of the most informative post I have ever seen in regards to basement of cellars.
    I have a couple of question for you guys & pardon my ignorance, I live in a 1st floor of an old brownstone that has a basement with a door inside & stairs leading to the 1st floor.
    Is the 1st floor and basement consider a single family altogether? Can you use that space as part of your home? Not sleeping of course.
    BTW, the basement has a window.
    Thank you in advance!!

  5. CHristian June 25, 2013 at 11:19 pm

    In regards to basement OR cellar, sorry for the typo & the basement has 3 windows.

  6. CHristian June 25, 2013 at 11:19 pm

    I meant in regards to basement OR cellar, sorry for the typo & the basement has 3 windows.

  7. Elizabeth July 29, 2013 at 11:45 pm

    This is an absolutely fascinating article – thank you! We own an 1864 wood frame carriage house in Carroll Gardens, Brooklyn, with a basement that is at-grade in the front of the house and because of the slope of the hill toward the Gowanus Canal, is nearly at-grade in the back of the house. We’re in the process of finishing the basement (legally) so it will have 8ft ceilings in the back half. We’re making a studio/family room and also adding a powder room. It has two windows and a door on the rear stone wall. We’ve been incredibly curious to know how the finished space will be valued ultimately and your article is a huge help.

    I sold a garden duplex a few years ago, also in Carroll Gardens, and the lower floor was 60% below grade in the front and a walk-out in the back so not an English basement (the garden had been dug out level). Our agent at the time said only the parlor floor could be listed as legal space although we could include the entire square footage. We did not mention the two bedrooms or full bath downstairs so it was listed as a 1 bedroom, 1 bath garden duplex with 1800 square feet (and a high price tag). Her explanation was that brokers and buyers know what this means. We sold it at the first open house with multiple offers.

    One other thing that fascinates me is how ceiling height adds value – an apartment with 11 foot ceilings vs. 8 or 9 ft is worth more for it’s air space. Also 2nd floor in a walk up is more valuable than a 3rd or 4th floor apartment.

    Nowhere but New York!

  8. SCF October 26, 2013 at 9:16 pm

    I had no idea that so much went into the valuation of bonus spaces such as basements. I also never knew the difference between and English cellar and a basement. I’ve only lived in one home that had a basement, and it wasn’t finished, so there wasn’t a ton of value there, but it’s good to know for the future the general percentages that those spaces are worth. Cheers

  9. Michelle Acers November 5, 2013 at 6:52 pm

    I know this is an older blog, but I was hoping you might be watching this.
    What/how would you classify the lower level in a 2 story mountain home, that only the rear wall backs to dirt?
    To further describe:
    Only one side has 25% dirt graded down other than the back wall.
    Also, the FRONT door is located at the grade level lower level.
    The lower level is fully finished, excluding the utility room.
    The lower level has been included in the full square footage by the tax assessor’s office, and is charged full taxes on that area.

  10. ARDELL DellaLoggia November 6, 2013 at 1:18 pm


    I would need to know a little more about the house to answer the question, as the answer would be different if it is a “raised rambler” vs a “reverse floor plan”.

    When you say “2 story” that usually means there are two stories above the “basement” as in 2 story with basement. If the kitchen is on the “top” floor and there are only two levels and there are two or three bedrooms on the same level as the kitchen, then it may be a raised rambler.

    So if you would please start at the kitchen vs the “front door” and answer these questions.

    When you are in the kitchen is there another staircase up to a bedroom level as in most any “2 story home”?

    When you are in the kitchen are there any bedrooms on the kitchen level without going up or down any steps and if yes, how many bedrooms?

    When you come in the front door do you have to walk down any steps to get to the lower level? Sounds like no.

    When you come in the front door how many steps do you go up to get to the kitchen level and if only a few like 4 or 5 steps do you go up another 4 or 5 steps to the bedrooms?

    There may be bedrooms in the lowest level, but the determination of how to value those comes from how many bedrooms exist on the kitchen level and/or above the kitchen level.

  11. ARDELL DellaLoggia November 6, 2013 at 2:01 pm

    Further to mine above, here in WA a true “reverse floor plan” would not say the word “basement” in the County Assessed Value.

    All homes with heated and finished lower areas will include the square footage for tax purposes. But some will call that taxable space “finished basement area” and some will not use the word basement, which makes it a reverse floor plan.

    Not sure if you can find the breakdown of your tax assessment, but usually there is one showing where the finished area is. Ours says main level 1,200 sf, finished basement 1,000sf, total finished area 2,200 sf” as example. Or “main level 1,200 sf; upper level 1400 sf total 2,600 sf” as example.

    Worth noting, ceiling height is also a factor in some cases. Our rules basically don’t use the floor space in the square footage if the ceiling above that floor space is less than 5 feet. This happens a lot in older homes on the top floor with dormers and angled ceilings created by a pitched roof. On the lower level one of our cities counts it different if it is at least 6’6″ from floor to ceiling than if it is less than 6’6″ from floor to ceiling.

    Based on your question I am assuming the ceiling height on the lower level whether it is underground or not is the same at between 7’6″ to 8′. If the ceilings are very low as in some basements in very old homes, that could make a different as well as to how it is counted and valued.

    This information here is available on the “County Parcel Viewer” but not necessarily on the tax bill.

    • Jonathan Miller November 8, 2013 at 4:59 pm

      Brilliant contributions Ardell – thanks!

  12. Michael January 24, 2014 at 8:58 pm

    Interesting and informative article. I have an ancillary question. In a NYC cellar in a 3-family home, what can I do with the space? I would love to convert to an apartment but that doesn’t seem possible. There’s also the possibility of creating a duplex with the ground floor apartment, but if I do that I’d like to maximize the value. I’ve heard an accessory rec room is legal as well as a two piece bathroom. What else can be done? Can multiple two piece bathrooms be installed for example? Does a two piece bath have to be a sink/toilet combo or can it be other? Can I install a sink/toilet in one room and two sinks in another, or some other combo of two piece baths? Again this is all for accessory space to an existing ground floor apartment, not a new apartment in the cellar.

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