I can see it's quality paneling. Real wood. But even that is frowned upong by most these days. I would recommend a light sanding and painting a light neutral color that will compliment the new carpet. I'd leave all the doors trim (even the area that's waincotted) and other built in's stained as they are though. They give the room a richer look.

Good luck to your Mom in selling her home!

Paint the panelling! Yes -- prime (Zinsser or Kilz) and paint the whole walls in a soft neutral will make a HUGE difference! The whole room will appear to be bigger and brighter.

For ideas -- go through some of these basement makeovers from the HGTV show "Divine Design"

Hope this helps!

Here is a link that might be useful: HGTV -- Divine Design -- Basements

Thanks for the help so far, but does anyone have any pictures of painted paneling? I have seen this done in a bathroom, but never a room to this size.

Looks like Divine Design just took it all out, we were hoping for a project more to the scale of Design on a Dime :)

Having just done our basement I have some recent experience.

1. I would not put down carpet if there have been water issues. Cheapest is to paint the concrete floor with a masonry paint and then use area rugs. It IS a basement. Otherwise I'd put in flooring that would not get destroyed by moisture.

2. Declutter! Get rid of all that stuff and it will look 100x better.

3. Paint, yes. We actually painted ours RH dusk which is a deeper blue that changes with the light and it looks gorgeous. We are also doing the ceiling black with tiles that look like tin, but the floor and rug is lighter. The ceiling and overhead lights are not in yet, but it looks like a really cool game room as opposed to a dingy basement now.

Here is one pic of the wallcolor. I will also post a pic of the now furnished room. We just have to add the trim and ceiling.

Here's one.....

Here is a link that might be useful:

I also wanted to add that if you won't want the look of painted paneling I've seen it done on TV where they used joint compound and filled in the crevises. Very time comsuming and I prefer the look when it's painted. Looks homey/cottagie.

This is one of the tv area. The other side (shown above) with the fireplace is where we put a small game table.

I just wanted to show that it doesn't have to be a light color. Since it's a basement it's not going to be the brightest room in the house, but if you light it properly it will look good. (Excuse my laundry, to be folded, on the couch!)