What Is the Difference Between Above Grade and Below Grade Square Footage?

Above Grade vs. Below Grade Space

When you browse home listings, you see square footage as a primary feature. This number helps you understand a property’s size and value. Many people, however, do not know that not all square footage is equal. A key distinction exists between living space that is above ground and space that is below ground. Understanding what is the difference between above grade and below grade square footage is crucial for any home buyer or seller. This difference influences a home’s market price, its official appraisal value, and even how you can use the space.

This concept directly impacts your investment. An agent might advertise a home as having 3,000 square feet of living space. If 1,000 of those square feet are in a finished basement, the property’s value is very different from a home with 3,000 square feet entirely above ground. Knowing these details helps you make fair comparisons and informed decisions. It protects you from confusion and ensures you know exactly what you are buying or selling.

Understanding the Core Terminology

The terms “above grade” and “below grade” refer to a home’s finished living area in relation to the ground level. The definitions are straightforward but have important implications. Above-grade square footage includes all finished living space that sits entirely above the ground. This typically encompasses the main floor, a second storey, or any other level completely clear of the surrounding earth. The key factor is that no part of the floor is below the natural ground line touching the home’s exterior.

Below-grade square footage describes any finished living area that is partially or wholly below the ground level. The most common example of this is a basement. Even if a basement has windows or feels bright, its position underground classifies it as below grade. This category also includes cellars and the lower levels of split-level homes where part of the wall is covered by soil. The distinction is not about the quality of the finish or its use; it is purely about its physical location relative to the earth.

A frequent point of confusion is the walk-out basement. These spaces often feel like a main level because of their large windows and a door leading directly outside. Despite this, appraisers and real estate boards still classify them as below grade because at least one wall remains partially or fully buried.

Check out this informative page for more about what your house is worth
Related Article: How Is House Square Footage Calculated in Canada?
Related Article: Is the Balcony Included in Square Footage in Ontario?

How Square Footage Appears on Real Estate Listings

Real estate boards have specific rules for how agents must report square footage on the Multiple Listing Service (MLS). These rules promote transparency and ensure buyers can make accurate comparisons between different properties. In most jurisdictions, agents must list above-grade and below-grade square footage separately. Combining them into a single “total living space” figure can be misleading and is often against regulations. This separation is vital for maintaining a fair and honest marketplace.

Imagine you are comparing two homes listed at 2,400 square feet. The first home is a two-storey house with 1,200 square feet on each level. The second home is a 1,600-square-foot bungalow with an 800-square-foot finished basement. While both offer the same total area, their layouts, functions, and market values are completely different. The separate reporting on the MLS allows you to see this difference immediately. It prevents a seller from masking a smaller above-grade footprint with a large basement.

As a buyer, you should always check for this breakdown. If a listing only provides a single total square footage number, ask your real estate agent to clarify. They can find the specific details or measure the property to confirm the above-grade area. This diligence ensures you are not overpaying for a property based on an inflated perception of its size.

The Grey Area: Walk-Out Basements

Walk-out basements are a unique feature that often blurs the lines for homeowners. A walk-out basement is built on a sloped lot, allowing for full-sized windows and a door that provides direct access to the outdoors. This design floods the space with natural light and makes it feel much like an above-grade level. Many homeowners use these areas as family rooms, in-law suites, or entertainment spaces because they do not feel like a typical basement. Homeowners often feel this space should count as above-grade square footage.

Despite their appeal, industry standards classify walk-out basements as below grade. The formal definition relies on the physical position of the structure. If any portion of a level is below the ground line, the entire level is considered below grade. A walk-out basement always has at least one wall, and often more, that is partially or fully backfilled with earth. For appraisal and listing purposes, it cannot be combined with the main floor’s square footage.

However, the market does recognize the superior quality of a walk-out basement. An appraiser will make a positive adjustment for a walk-out feature. They will assign it a higher value per square foot than a standard, fully submerged basement. While it is not valued as highly as above-grade space, it contributes significantly more to a home’s overall value than a cellar with no natural light or direct egress.

Building Codes and Livable Space Requirements

The distinction between above and below grade also ties directly to building codes and safety regulations. For any space to be legally considered a “finished living area,” it must meet specific criteria defined by local authorities like the Ontario Building Code. These codes ensure that living spaces are safe, healthy, and habitable. The requirements are often more stringent for below-grade areas due to inherent risks like moisture and limited escape routes during an emergency.

A crucial requirement is proper egress. Every legal bedroom, whether above or below grade, must have an exit. This can be a door leading directly outside or an egress window large enough for a person to escape through. In a basement, this means windows must meet minimum size and opening requirements and be a certain distance from the ground. This ensures a safe exit in case of a fire when stairs may be blocked. A basement room without proper egress cannot be legally marketed as a bedroom.

Other building code requirements for finished spaces include minimum ceiling heights, adequate ventilation, heating, and electrical service. These standards apply to all living areas but are especially important when finishing a basement. A damp, dark cellar cannot simply be carpeted and called a family room. It must be properly renovated to meet code before its square footage can be included in the “finished below-grade” calculation on a listing.

Practical Advice for Home Buyers and Sellers

Understanding the difference between above-grade and below-grade square footage empowers you to make smarter real estate decisions. Whether you are buying your dream home or selling your current property, this knowledge provides a clear advantage. Here is how you can apply this information:

• For Buyers

  When you review a listing, look for the separate figures for above-grade and below-grade areas. This lets you compare properties accurately. Also, consider how the space fits your lifestyle. A finished basement might be the perfect spot for a home theatre or gym, adding valuable utility even if its appraised value is lower. Do not dismiss a home because of its below-grade space; instead, evaluate its quality and potential.

• For Sellers

  Work with your agent to market your home accurately and effectively. Ensure your listing clearly separates the square footage. Instead of just listing numbers, highlight the features of your finished basement. Use high-quality photos and descriptions to showcase it as a bright, functional space. Mention its specific uses, like a guest suite or home office, to help buyers envision its value. Being transparent builds trust and attracts serious buyers who appreciate the extra space.

Conclusion

A clear understanding of these terms helps set realistic expectations for everyone involved in a transaction. A knowledgeable real estate professional can help you navigate these details, ensuring you understand the true size and value of a property. This expertise is vital for making a confident and successful investment in your future.

While the formal valuation rules are clear, the personal value of below-grade space is up to you. A well-designed walk-out basement can provide just as much enjoyment as a main-floor family room. The key is to know the official classification and how it affects the price, then decide how that space fits your family’s needs. By approaching your search or sale with this knowledge, you position yourself for a better outcome.