When determining the value of a home, your agent will first take into consideration the home's Gross Living Area, otherwise known as square footage.
The Gross Living Area of your home includes the fully-finished, above-grade areas of your home. Typically not included are basements, attics, garages and enclosed or covered porches.
One of the most common discrepancies I see with homes listed for sale here in the Danbury, Connecticut area is that sellers and their agents sometimes include a finished basement in the total square footage of the home. Below-grade areas, whether finished or not, are not calculated into the total square footage of a house.
An unfinished basement will add a some value to your home versus a home that is built on a slab, without a basement. And, of course, a finished basement will certainly add value to your home versus a home with an unfinished basement. However, basement spaces do not add to the Gross Living Area total for the home, and whether finished or not, basement areas are not valued by appraisers the same as above-grade living areas.
Adding a finished basement's square footage into the total square footage of the home is misleading and deceptive. Pricing your home based on this misleading figure will result in a price that cannot be substantiated via an appraisal, which is a contingency in most transactions requiring mortgage financing. Should the buyers and their agent not realize the square footage error and write an offer based on what turns out to be an exaggerated square footage total, your sale will most certainly hit gridlock when the appraisal value comes in lower than the contracted purchase price.
Appraisers and their appraisals protect both the lender and the homebuyer from overpaying for a house. Appraisers do not attempt to justify contract prices. Rather, they review the subject home, comparable sales and market conditions to determine an unbiased value of your home. Again, it should be repeated that whether finished or not, basement areas are not valued by appraisers the same as above-grade living areas.
Some exceptions may apply, such as the lower level of a Raised Ranch-style home being included in the total square footage, if that is customary in your area. Other local customs may take precedence in other areas, and they will traditionally be applied across-the-board.
Be sure to advertise your home with the correct square footage. Real estate marketing should be honest and will thus generate the best results.