I see one huge mistake time after time. It causes more anguish between my mortgage division and clients than any other valuation issue: Finishing a basement to increase property value.

It doesn't.

It increases MARKETABILITY but hardly affects VALUE.

Cut that out. I saw you roll your eyes! Here is a cold, hard fact: (at least for my area here in Atlanta) value per square foot of unfinished basement $5, value per square foot of finished basement $10 (plus or minus).

Considering it's going to cost at least $20 per foot (doing the work yourself) to finish your basement that's not a good investment if you're doing it simply to increase the value of your home hoping for more equity. If, however, you are doing it so you can sell your property at the top of the market value for your area it can certainly help.

What defines "basement"? Subterranean rooms are defined as any space with one wall touching dirt. That means if you have a corner of your home where one wall is below the grade of your yard - you now have a basement. It doesn't matter if the other three walls are above the level of your yard, all the walls have windows and even if the entrance door is on that same wall which is below grade ... it's still a basement.

Stop arguing with your appraiser. They're licensed.

So what to do to increase the VALUE of the property? Pretty simple - square footage. Add a bedroom and a bath to your home. Nothing beats the value this adds: not tile floors, not vaulted ceilings, not solid surface counter tops. Those only moderately affect value even though they will certainly make the sales price of that property be more highly favored by the seller.

If you're intention is to keep your property and build equity nothing beast square footage. Let's say the price per square foot in your area averages $110. It's pretty easy to see that if you add a 300 square foot guest suite onto your home you just increased the value by $33,000. You can probably find a contractor to do the work for $60-$80 per square foor so you're making a wise investment.