Is it cheaper to tear down our existing house and rebuild, or buy a new construction?

[Anonymous]

Yes always cheaper to teardown and build

[Anonymous]

Tell me people, if one (like OP), has a large outstanding mortgage on the property, how can you possibly proceed with tearing down the house? Don't you have to pay off the mortgage? Is there some sort of roll over vehicle? I am familiar with build-to-permanent loans, but they are not for the cost of the house being demolished.

What happens with the mortgage in this scenario?

[Anonymous]

We went through the process of tearing down and rebuilding.

For the same quality, same design, same everything, it is typically more expensive to build your own than to buy a lived-in home that is say 5-10 years old and still new-ish.

The key to building your own isn't to save money, but to get exactly what you want, which is often quite important for people who buy higher priced homes.

I understand that some people build their own to save money, because there is a lack of homes in their price segment on the market, or that they'd like to trade off quality for more space at the same price. For example, people see a 6000-sqft above grade home for $1.8M and think to themselves that they can build a 6000-sqft new home near by for 1.6, or that they can get 7500-sqft out of a a 1.8M budget.

I have friends who have gone through the rebuild experience after seeing what we did. Some of their homes have creaky floorboards 2 years into it.

Note that I've also seen some really expensive but poorly built custom homes, so getting the right team together is definitely important.

[Anonymous]

Anonymous wrote:Building yourself is cheaper. We had a 1.6m budget in mclean. After looking at homes at that range we ended up buying a 800k lot and building for 800k for a 7000sf house. House appraised at 2.3M. if we bought new construction it would have been 2.3m way out of our budget.

There is no way you can build a 7000sf house for $800k. That's just over $100sf - impossible.

[Anonymous]

Usually you make about 20-30% instant equity when building

[Anonymous]

We went through this analysis- ultimately we decided to renovate since the interest rates pushed the construction loan up more than we wanted to spend on housing.

[Anonymous]

I’ve noticed that the resale of a custom home is less and a brand new build. I think the custom home loses vale since it’s been lived in and ppl who want new for the sake of new will not consider it.

A house built new in 2014 will look considerably dated to a 2018 -2019 home.

Ppl around here base their perceived cache on their house. They are willing to spend $$$$ on a house that isn’t really that great.

[Anonymous]

Anonymous wrote:I’ve noticed that the resale of a custom home is less and a brand new build. I think the custom home loses vale since it’s been lived in and ppl who want new for the sake of new will not consider it.

A house built new in 2014 will look considerably dated to a 2018 -2019 home.

Ppl around here base their perceived cache on their house. They are willing to spend $$$$ on a house that isn’t really that great.

True that a new build in the same area will be more than an old. But if you built new and there are no more areas to build them the neighborhood would not allow me build. I noticed some places in mclean where a new build costs the same as a 10 year old because of property values. You want to build the biggest possible.

[Anonymous]

There is a cost in customization. But I also think that the cost for a tear down varies with property location/market value too. The justification for a tear down varies widely with the value of the location - building materials will include a markup in "hot" real estate markets. In DC, California, New York, where there are people who can afford a 300% markup for a doorknob, builders will charge that. The building materials to build a house in Small Town USA, Tysons Corner, DC doesn't have much of a variance in price. The complexity, managing the project and nuances unique to each case of course come into play. But largely, the cost of labor in those markets has a direct correlation to the price consumers are willing to pay there.

[Anonymous]

I want to take down a old home and then fill in a basement and put a cement slap down and then a 3. Bedroom 2 bathroom house with a 2 1/2 car garage on here

[Anonymous]

Anonymous wrote:

Anonymous wrote:So, in-close in, well-established neighborhoods, 20 mins to DC, how much does a well maintained 2500 house on 1.2 acres in desirable neighborhood cost to builder (i.e., how much will builder pay to re-build or tear down) approximately. Thanks.

OP, thanks for starting this thread, as it is a worthy question currently.

The condition of your current home will be almost irrelevant to a builder if they are planning to tear it down. A builder is going to pay the same price as everyone else - ie, the market price for buying the house. If anything, a poorly maintained home would be more attractive as it would deter competition for the home and allow the builder to push for a low price. This holds true for anyone wanting to buy a home to tear down.

The cost to build depends on site work, labor, and materials. However, those prices don't change a whole lot in comparison to the price of the lot. The cost to build on a $1 million lot in McLean versus a $30,000 lot in Gainesville would be comparable for the same size and quality of materials. The difference in final sale price is the value of the land and its location.

There is always a cost benefit analysis to the cost of acquiring a property, the cost to build something new, the amount of expected gain, and how much that home could go for. Just because someone spends $1 million to build a home doesn't mean it is worth that price in the market. This holds true for renovations as well. Many people have made the mistake of over doing their home in relation to their neighborhood.

Homes on lots more than 1 mil are humongous, because builders have to make money on the sale by selling luxury and more sq.ft. This spells trouble for owners wanting new a build on their lot, because they have to build huge and it will be around 2 mil just to build. This is our conundrum and why we cannot afford to build. If we build a small house (small is 4K sq.ft for our area) then it won't sell when we move and we may lose money, although there is a lot of demand for cheaper new homes, more than for $$$$ new homes. It's just what the area commands, big luxury homes. Builder will want to make money either way if they build small or big, but will you?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So, in-close in, well-established neighborhoods, 20 mins to DC, how much does a well maintained 2500 house on 1.2 acres in desirable neighborhood cost to builder (i.e., how much will builder pay to re-build or tear down) approximately. Thanks.

OP, thanks for starting this thread, as it is a worthy question currently.

The condition of your current home will be almost irrelevant to a builder if they are planning to tear it down. A builder is going to pay the same price as everyone else - ie, the market price for buying the house. If anything, a poorly maintained home would be more attractive as it would deter competition for the home and allow the builder to push for a low price. This holds true for anyone wanting to buy a home to tear down.

The cost to build depends on site work, labor, and materials. However, those prices don't change a whole lot in comparison to the price of the lot. The cost to build on a $1 million lot in McLean versus a $30,000 lot in Gainesville would be comparable for the same size and quality of materials. The difference in final sale price is the value of the land and its location.

There is always a cost benefit analysis to the cost of acquiring a property, the cost to build something new, the amount of expected gain, and how much that home could go for. Just because someone spends $1 million to build a home doesn't mean it is worth that price in the market. This holds true for renovations as well. Many people have made the mistake of over doing their home in relation to their neighborhood.

Homes on lots more than 1 mil are humongous, because builders have to make money on the sale by selling luxury and more sq.ft. This spells trouble for owners wanting new a build on their lot, because they have to build huge and it will be around 2 mil just to build. This is our conundrum and why we cannot afford to build. If we build a small house (small is 4K sq.ft for our area) then it won't sell when we move and we may lose money, although there is a lot of demand for cheaper new homes, more than for $$$$ new homes. It's just what the area commands, big luxury homes. Builder will want to make money either way if they build small or big, but will you?

To clarify my point of why we cannot afford it: it's the unfortunate equation of how expensive new construction huge homes are and lots are and how much *relatively* cheaper older homes are (even older mcMansions). If you want to sell your house and not lose the equity you got in your land then you have to build big and it's at least 2 mil, even if you really want a place half the size. If you do build half the size (like 4-5K sq.ft) then you won't sell easily for a price to recoup the equity in your land, because then you are competing with older mcMansions which in a $$$ area are bigger than your new home and need to sell it for the same price to break even. Older Mcmansions may have more upgrades (your builder is unlikely to do), more mature landscaping/hardscaping, etc and they have bigger sq.footage.You will need a buyer willing to pay more per square foot and desiring a smaller home.

OP has to build what sells in her specific neighborhood, this will determine the price of her build.

[Anonymous]

Anonymous wrote:Yes always cheaper to teardown and build

disagree. Depends highly on the area, how expensive the homes are around you and if you really like the type of home that are being built and successfully sold in your area. For us it means 2 mil + build budget and that's out of reach. I don't *need* or want a huge home, I just want to upgrade and expand some spaces like closets, bathrooms, get another floor maybe, get higher ceilings, but the cost of it is so high you might as well build. But then building a "small" home I want is too expensive because you may not get your money back as you are competing with old mcMansions in this price range, which are bigger. You might as well buy an older mcMansion or an already expanded older home and save a headache unless you really really love your lot.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Building yourself is cheaper. We had a 1.6m budget in mclean. After looking at homes at that range we ended up buying a 800k lot and building for 800k for a 7000sf house. House appraised at 2.3M. if we bought new construction it would have been 2.3m way out of our budget.

What builder did you use and were you happy? High, medium or low end finishes?

IDK when this was, 7K sq,ft home build will cost at least 1.5mil now and that's not high end anything. Your house is worth 2.3mil. For someone whose land now is worth not 800K, but more like 1.2 mil by today's prices your home if built TODAY will cost 400K more roughly. Is it worth it to have a "new" vs. buying your home recently built for 2.3 mil and avoiding the headache of living through a build?

[Anonymous]

Anonymous wrote:I want to take down a old home and then fill in a basement and put a cement slap down and then a 3. Bedroom 2 bathroom house with a 2 1/2 car garage on here

Filling in the basement might create settlement issues for the foundation of the new house. It can be very expensive purchase suitable fill material and compact the soil every foot, then have a soil engineer test each layer to ensure it is stable enough to add more soil. It would likely cheaper or a similar cost to remodel and build a new basement.