Father Time and Mother Nature are an undefeated tag team. Eventually, through infinite persistence, they claim everything. One day, they will even make the ultimate foreclosure against the very home into which you've no doubt invested a lifetime's worth of money and toil.
Like any significantly priced piece of property, the costs of repairing and renovating any house eventually eclipse its actual value. The instant you fix one problem, it seems two new ones develop. Much like an automobile, the older the house, the quicker its original construction systematically erodes to problematic degrees without consistent maintenance. It never fails to evoke bittersweet memories, but the day eventually comes when a house is better off being demolished to make way for a brand-new residence ready for a hopefully decades-long life of its own.
Therein lies the question, though: when is it time to say goodbye to a house with a storied history dating back possibly several generations? Below are some things to consider during this process.
"Hidden" Problems Keep Driving Up Renovations and Repairs
Scheduling a professional inspection by a company like Tri-State Disposal before either renovating or demolishing can reduce costs drastically. It can even sway your decision between the two options from leaning one way to reconsidering the alternative. A demolition company's standard full inspection will look for such red flags as toxic mold, a cracked foundation, or asbestos. All issues that can multiply the cost of even a minor renovation if discovered mid-project. It is far wiser and less costly to search out leaky pipes, poor wiring, and rotted wood or timbers before a contractor discovers them when tearing away drywall, even if it means coming to grips that it's time to bid your home farewell. This is more than a money matter. It's a question of keeping you and your loved ones safe.
Ask Yourself: Is Demolition Cheaper?
Take some simple math under advisement for a moment. Considering estimates from across the United States based on a "modest" property in a middle-class neighborhood, demolishing a house costs an average total of $9,000, after footing the bill for hauling away and disposing of resulting materials. Accounting for variances in features, building materials, location, size, and site work can bring the typical rebuilding cost for a 2,000 square-foot home with no basement and fairly "standard" features to $70,000 or more easily, although some projects may cost several thousand dollars less with only minimal site work needed.
If that sounds costly, remember that demolishing and rebuilding a more complex construction in a higher-value neighborhood often surpasses the $500,000 ballpark virtually anywhere in the country.
Then again, homeowners frequently underestimate just how expensive renovation can become. Projects rarely come in under $35,000 for a 1,200 square-foot house with two stories and an 800 square-foot basement. In fact, an $85,000 budget would be far more realistic. Don't even think about assuming a home renovation will come in under $10,000.
Circumstances beyond Your Control
Some conditions may make up our mind whether to renovate or demolish without your having much sway in the matter at all.
Sometimes, circumstances either rule out demolition entirely or make it logistically unreasonable. For example, most jurisdictions set up as much red tape as possible to slice through at the local, state, or even federal levels before you can tear down a historically significant "heritage home." Regardless of that specific status, demolition must take into account a dizzying array of local building codes that change constantly. Certain limits they may impose upon a home newly constructed on the same site after demolition might just rule out rebuilding entirely.
Renovating comes with its own complications. Never mind the debate between a brand-new designer home with your choice of trimmings and essentially re-skinning your old home around its old "bones." More importantly, renovations projects can create health hazards potential occupants with asthma or allergies should take especially seriously before deciding to occupy a house undergoing an inside-out makeover. Within reason, "deconstruction" will reuse viable parts of your old house such as windows, tiles, historical features, and timbers to save money on material costs and minimize environmental impact. However, cutting corners with code compliance can risk massive legal penalties, particularly if shady practices should be discovered prior to selling the home.
That's the crux of adequate planning, including a thorough inspection: budgeting enough time and money to set things straight the first time so and avoid having to pay for the same project twice with a costly do-over. Remember to factor in the cost of a later appointment with a contractor to discuss maintenance and updates and the reality that a renovated home's warranty doesn't measure up to that of a brand-new construction.
Can You Finance Demolition?
Before they approve a sizable construction loan and mortgage, your lender will carefully weigh whether your finished home's expected value will support your new debt such that they can sell the property in order to recoup the balance on a default. Expect a professional real estate appraisal and evaluation of several more financial considerations before you can officially afford to move ahead.
Most importantly, you cannot tear your house down at all without either paying off your existing note or your current lender granting explicit written permission. Don't expect to receive the latter if you owe more than the land is currently worth; after the demolition, that will be the only remaining equity. If you destroy your home anyway, the lender can and will raise legal hell by invoking your mortgage's default clause.
With an existing mortgage, your new loan must fully cover the current home's remaining balance, the actual demolition, and your new home's construction. Approval may hinge on your property's sufficient equity serving as a down payment after demolition and your current loan's full repayment.
It's all a fairly simple proposition of evaluating what you can afford and what you want. Over a longer term, renovation and demolition come out about equal. When paid for upfront, renovation is ordinarily much less complicated to afford when properly planned for an already structurally sound home. It will also keep a roof over your head during the project, provided you can accept the chaos and the environment doesn't raise any health or safety concerns. If you own a heritage home, you may have no choice except to renovate.
On the other hand, there comes a point when longevity favors demolition and a subsequent new instruction. For one thing, you can expect a far more comprehensive warranty. However, you may encounter some sizable financial expectations from your lender before they even seriously consider financing your project. That's all saying nothing of the sea of regulations to sift through in order to ensure that demolition and rebuilding remains above-board from start to finish.