What makes a house a “tear down”

[photopress:tear_down.jpg,thumb,alignright] Here in Kirkland, a lot of people complain that the builders are tearing down homes and putting up “McMansions” in their place.

I can walk up and down the streets of Kirkland and “label” each and every house I pass. “Remodel project”, “tear down”, “fixer”, “builder’s dream come true”, will sell “as is”, etc… The number one reason a house becomes a tear down is due to years and years of deferred maintenance. Often these homes are owned by people who inherited them or who purchased them many, many years ago when they were dirt cheap. The increase in taxes over the years suck up any money the owners might have had to make improvements. They have just enough money to get by and the moss overtakes the roof, the wood rot overtakes the fascia boards and siding, the trees get bigger and bigger and crack the foundation, birds make nests in the rotted fascia boards. It’s like a used car that finds its way to the scrap heap, once the cost to repair exceeds the book value.

“Book Value” of a house equals the value of the lot. The value of the lot is based on it’s “highest and best use” and based on its “potential”. If the lot would have a view IF it were a two story house, than the highest and best use of that lot is to put a two story house on it. If that gives the lot a value of $650,000, then that is the value of the dirt. People have a tendency to value a property by what is on the lot and say, “Oh I wouldn’t pay more than $350,0000″ for that house!”. If the lot is worth $650,000, then the house can’t sell for $350,000, no matter how awful it is.

Take the house in the photo above. Would you spend $650,000 to LIVE IN IT? If you would pay $125,000 to live in it, and a builder will pay $650,000 to tear it down…well then I guess everyone has to agree that it is a “tear down”. But they don’t all agree that it is a tear down. People never all agree on anything, do they?

They don’t agree because they like having a little tiny house next to them that doesn’t block their view. They don’t agree because they don’t want the noise of the builders putting up a new home next door from morning until night, day after day, so they can never take a nap in the afternoon again until the new home is finished.

They might all agree that it should be torn down, but they want it to become a new park or playground…as long as no one every comes to play in it and make noise :-) They never ALL agree that it should be torn down and become a “McMansion”, especially if they live in the cute little bungalow next door.

About ARDELL

ARDELL is the Managing Broker of Sound Realty in Seattle/Kirkland. ARDELL was named one of the Most Influential Real Estate Bloggers in the U.S. by Inman News and has over 22 years experience in Real Estate up and down both Coasts, representing both buyers and sellers of homes in Seattle and on The Eastside. Follow Ardell on Google+

Comments

  1. lori whinery says:

    Hi we need help on making a decision. Should we tear our old house down and build new or slowly remodel this one. The problem is our septic would have to be shored up and that will cost alot to do. So if we just remodel we will not have to do that. We just bought a 1925 home with 21/2 acres of land with a beautiful view of Mt. Ranier in Tacoma Washington. It cost us 350,000.00 the house needs alot of work but it is only 1200 sq ft.I love old homes and would be kind of neat to fix it up, but the foundation needs shoring up and it needs new siding not to mention new kitchen,floors throughout, ect. Someone quoted us 19,000.00 to put footings under the house and someone said that was too much. Do you know anyone who could do it for less? Oh what to do help. Lori Whinery

    • Carolyn Contreras says:

      Dear Lori,
      I am looking for the children of Dick and Flo Whinery of Dallas TX. My husband, Phillip and your Dad went to SMU law school. Are you the right Lori? THANKS

      • Lori Whinery Pickett says:

        Hi Carolyn, I’m the Lori you are looking for. I live in Anchorage, AK and work at the Alaska Literacy Program. You can contact me there at xxx-xxx-xxxx. My mom has moved up here and volunteers at my office and Dick is still in Texas living in Ft. Worth.

        Note: Lori – I sent your full comment with phone number direct o Carolyn via email. Since she asked the question so long ago, I wasn’t sure if she would see it here. I sent her the phone number, but deleted it from this post. ARDELL

  2. Not my ara of expertise there, Lori. Is the land subdividable? I don’t know Tacoma at all.

  3. Lori, I am in the same as Ardell, Tacoma is not my area of geo expertise. As an appraiser I must refer you to someone who as the main post by Ardell touches on and that is Highest and Best use. An appraiser or broker may be able to help you in this area.

    All Highest and Best use problems take a little bit of number crunching and the crunching needs to be based on good market data.

    Good luck.

  4. Hi Lori, …this is an extremely tough question to give a clear cut answer. Huge factors are involved for you to make the best choice that none of us know or could answer for you. So here’s some questions that might help you arrive at your answer.

    As I see it…it boils down to time and money. If you tore it down and built new, where will you live for the X number of months it will take to demolish and build? Can you afford the holding costs and/or the payments on a construction loan in addition to any loans you took out to buy the property in the first place? You’d have to talk to a lender that is experienced in construction loans to help you figure out what kind of dollar figures you’d be looking at.

    How much remodeling has the house had since 1925? What else needs to be done just to make the house safe to live in. You listed foundation, siding, kitchen, floors, …but what about plumbing? wiring? Is the electric panel still knob and tube? Some (many?) insurance companies won’t even issue you a policy for a house with knob and tube.

    Can you and your family live with the noise and the constant mess of a progressive remodel? …if there are little kids around….it’s also dangerous with all the construction materials and nails and such everywhere all the time.

    If you went with building new…Is building a new house somewhere else on the 2.5 acre lot while you live in the old house an option? That would solve the problem of where you’d live during construction.

    Tough tough question Lori, …I dont’ know if I helped any in helping you answer it! :) Building new….you wipe the slate clean and everything is brought up to today’s standards and code at the same time, but financing it could be an issue as well as living arrangements during construction. Progressive remodel ….you’re remodeling bit by bit ..most likely take a lot lot longer to get to a fully remodeled place, …what would cost more in the long run? …

    Sorry for the non-answer answer, but there’s simply too many factors involved in such a huge decision to simply tell you what to do. Otherwise I’d say … uhm… a vacation in Hawaii sounds good!

  5. Hi Lori, …this is an extremely tough question to give a clear cut answer. Huge factors are involved for you to make the best choice that none of us know or could answer for you. So here’s some questions that might help you arrive at your answer.

    As I see it…it boils down to time and money. If you tore it down and built new, where will you live for the X number of months it will take to demolish and build? Can you afford the holding costs and/or the payments on a construction loan in addition to any loans you took out to buy the property in the first place? You’d have to talk to a lender that is experienced in construction loans to help you figure out what kind of dollar figures you’d be looking at.

    How much remodeling has the house had since 1925? What else needs to be done just to make the house safe to live in. You listed foundation, siding, kitchen, floors, …but what about plumbing? wiring? Is the electric panel still knob and tube? Some (many?) insurance companies won’t even issue you a policy for a house with knob and tube.

    Can you and your family live with the noise and the constant mess of a progressive remodel? …if there are little kids around….it’s also dangerous with all the construction materials and nails and such everywhere all the time.

    If you went with building new…Is building a new house somewhere else on the 2.5 acre lot while you live in the old house an option? That would solve the problem of where you’d live during construction.

    Tough tough question Lori, …I dont’ know if I helped any in helping you answer it! :) Building new….you wipe the slate clean and everything is brought up to today’s standards and code at the same time, but financing it could be an issue as well as living arrangements during construction. Progressive remodel ….you’re remodeling bit by bit ..most likely take a lot lot longer to get to a fully remodeled place, …what would cost more in the long run? …

    Sorry for the non-answer answer, but there’s simply too many factors involved in such a huge decision to simply tell you what to do. Otherwise I’d say … uhm… a vacation in Hawaii sounds good!

  6. Jerry Minor says:

    Thank you for a great website and answers to many questions. Can you direct me to someone that tears down homes for scrap or for the lot – in either Lewis or Pacific county – I don’t even know what these people would be called -
    thanks
    Jerry

    • Demolition Contractors is what the scrap/tear down contractors are called, and Site Prep Contractors, you can find those through survey companies, will prepare the site.

  7. Jerry Minor says:

    Thank you for a great website and answers to many questions. Can you direct me to someone that tears down homes for scrap or for the lot – in either Lewis or Pacific county – I don’t even know what these people would be called –
    thanks
    Jerry

  8. I don’t know what you mean by “or for the lot”. Are you suggesting that whomever tears it down and takes away the debris gets to keep the lot?

    If that is the case, I’m sure I can find someone willing to do it.

  9. Our present house was a “tear down”. Thanks to the “old WaMu” we were able to buy it with an enlargeable loan that we could increase as we made it more valuable by our efforts. (Link below).

    http://knol.google.com/k/jerry-gropp-architect-aia/when-it-was-a-mid-century-modern-bank/246qxuxd260sm/15#

  10. Ardell, it’s too bad your photos on this post were lost…they really illustrated your points… I remember this post.

  11. I know, Rhonda. Lots of photos are lost. I don’t know why. Do you remember Dustin telling us why?

  12. I only remember that it was during one of the many modifications to this blog. I lost a bunch of photos too. I remember the photos from this post — it’s such a great point. We’ve had so many tear-downs in our neighborhood and some people would be saying “thank God that eye-sore’s gone” and others, I’m surprised I didn’t see protests.

  13. Those were the days for WaMu portfolio loans.

    Now Jerry, as I click through the various links you have a very strong internet presence. It never occurred to me that you had that much stuff going on, on the web. It’s extremely impressive. Which is actually your main site? What has the most content, and what is the knol site supposed to be?

  14. David-

    Thanks for the kind words. Here’s a link to my main WebSite. All the other “Knols”, etc. link back to it. Jerry

    http://sites.google.com/site/jgropp2/alterationsanadditions

  15. You may hate this, but what I have wanted to do for about 12 years now is take the open beam modern, flatten the pitch and use those big ass beams to build a second story. It just looks so simple, I don’t know why people don’t do it.

    I’m not talking the nice ones with the view, but the carpy ones stuck in the middle of neighborhoods where they don’t fit in. Some of those 1962 ones that used the big beams in the smaller model homes. In a lot of cases those beams sit on good concrete pads, and even if they don’t they could be manipulated any number of ways to make them stronger than anything I could get today.

    Anyway what are knols, and is your web site a Google site?

  16. David- Here’s what a Knol is

    http://knol.google.com/k.

    I built my WebSite
    using Google tools

    “the carpy ones (sic)
    sound fishy to me. :)

  17. Up the hill from me there is a street of “kit” moderns. You know, the ones that are smaller, open beam, big hefty beams, but small three bedroom homes. They sit up, and with a second story, even an open area second story, they would have a commanding territorial view. Structurally i think it’s doable, but have never investigated.

    Thanks for the links.

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