What is the best way to determine if a home is a tear down or a remodel?

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July 27 2011 - Edina
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Take a college student in there (substitute musician, artist, or any other low wage earning creative). If they can't last more than three minutes without running out, it is probably a tear down, otherwise, remodel.

This is actually an important question and is completely based on perspective. Agents will advertise a home as a tear down that my buyers will remodel. This happens all the time and is primarily based on one agent's viewpoint versus another.

In the Northside neighborhoods of Chicago (as in many pricey sections of urban areas), such as Lincoln Square or Andersonville, there is a paucity of affordable single family homes so many first time homebuyers, and those who work in non-lucrative professions struggle to find ways to become homeowners in a neighborhood they have spent years renting. Some of those people will take a home that is structurally sound but looks so terrible that home make-over shows would reject it. If there is a functioning safe source of heat, no leaks, and electric that isn't a fire hazard, the right kind of buyer could 'steal' themselves an affordable home in a desirable area.

But for others...these homes are tear-downs. With homes that are literally collapsing, or lack zero architectural integrity, this is to be expected. But other times, realtors will short change a seller to attract a tear down developer that will pay cash and close fast, all because they don't want to wait a little longer for the right kind of buyer who will slowly bring the home back to life (and benefit the seller's pocketbook as well).

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November 13 2013
Profile picture for Ben Ganje
Beth good question! It the current market it really depends on a number of factors including:

*Lot size
*Lot price relative to build budget
*Soil conditions (soil borings may be required-- [deleted by Zillow moderator. Please see our Good Neighbor Policy for posting guidelines]
*Slope and lay of the lot
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November 12 2013
It's relatively easy to "gut" a home, to tear it down to its most basic structural elements. Material costs are on the rise and starting with a decent shell - foundation, framing and sheathing you could easily save $20-$50,000 over a complete tear-down. I have many investor clients that realize this fact and do quite well with homes that most people would never consider.

The bottom line is, the structure must be in good condition to make this feasible.
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February 13 2013
Best way is to look at the location and the appraised/city assessed lot value.  If you are able to obtain the property for close to the lot value, then a tear down is probably the less expensive option. Main benefit with teardown is avoiding unknowns versus a major remodel that could become pretty costly.  A tear down is easier to estimate and control cost, plus the layout/feel is cohesive.
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August 05 2011
Beth, you are an agent so I am assuming you are asking for a myriad of reasons.
We would see a tear down on something that has foundation issues that don't look like they will get resolved. Tear down if the homes in the area have been upgraded and the house in question is a 'shack' but the land has increased in value.
Tear down if your buyers simply believe the land will keep appreciating but the house is not worth rehabbing and they don't want to pay tax on the home.
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July 28 2011
Most of your contributors touched on when it makes sense to consider total redevelopment verses remodel.  Firstly, if homes in the area are going for somewhere between 2.3 and 3 times the purchase price of a teardown opportunity in the immediate area then tearing down and replacing with new can make for a viable economic decision.

Thanks,

Brian Hickey
[website removed by Zillow moderator]
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July 28 2011
Profile picture for the_country_hick
A remodel is something that simply is out of style. It has no known defects.

A house that has known defects could be much more expensive to repair than anticipated. Once the destruction begins more problems can arise that make reconstruction much more expensive than was originally thought.

You might start with a $20,000 repair estimate and end up spending over $60,000. You never know until it is finished.
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July 27 2011
Profile picture for Pasadenan
No one buys to tear down if they can get a similar empty lot with similar zoning in essentially the same area for the same or less money.

So, the real question is what a potential buyer is buying for, and what the zoning is.

And if it needs so much work that one would consider tearing it down to build similar?  Usually one is better off searching for what meets your criterion up front instead, unless one is a contractor and plans on doing the work themselves.

Don't expect a Realtor to answer all your questions... their "license" is "sales"; and providing information about construction and construction costs is outside of their licensing and most of their experience.

The biggest factor developers consider here is what the present zoning is, and whether they can get more units on a lot than what presently exists.  There also are "historic preservation" issues in this city that can delay getting a demolition permit for months.

And if one is looking at environmental issues (green building...), it is almost always more environmentally friendly to fix an existing structure than to remove and start over.

Some people use a "rule of thumb" of if repair is 50% of replacement cost or more, one might as well start over.  Obviously, if one had a major fire affecting the structural integrity of the building, then building replacement usually would make the most sense.

If all it needs is a new foundation, one should contact some house movers for some quotes for picking up the house, and putting it back down after the foundation is complete.
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July 27 2011
Christy is right, you need to look at the area and see what homes are going for. If homes are going for at least 30% and you like the location then you need to have a home inspector tell you what needs to be done. You also need to have a builder tell you what the costs would be to tear down the place and build what is your dream home.
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July 27 2011
You really need to look at the quality of the "bones" or structure of the house and the overall costs to remodel.

 Another thing to consider is the area that the house is in.  If the house is in an area where there are homes of a similar or higher value, can it handle a tear down?  Are there other newer homes nearby? Is there demand in the area for a remodeled home?

Your Realtor should be able to answer ALL of these questions for you.  They should be able to provide you with similar homes that have sold that already have been remodeled and you can see if it's worth your time and $ to invest in it that way.  OR they should be able to tell you what a new home on that lot would be worth.  
Remember to keep in mind there are 100+ items to consider when you are looking at expenses that you could incur to remodel or tear down. You have misc city fees for tearing down, utility hook ups,  etc. not just the cost of the new home.  

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July 27 2011
 
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What is the best way to determine if a home is a tear down or a remodel?
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