For years, custom home builders have made their living by purchasing home sites and building a new home on them, or building on a lot that a family already owns. While this is still pretty much the program, new lots are much slower to come to the market. In many cases, typicallyinner city, there is simplyno more room for new lots or homes. This is also the case for big view lots around lakes, overlookingthe city or the hill country. Most families accept that the choice is to buy a several year old existing home, or live in the outskirts.
Another option is growing legs in most cities and Austin is no exception. Tear Downs! Specifically, a buyer purchases a less than perfect home on an amazing lot, they then contract with a builderto remove the home and begin design work on their new residence. Many of the best custom home sites are truly hiding under the homes that simply got there first, several years ago. This is an important trend to consider for both buyers and sellers. For sellers, if they own an older home on an “A” lot, there is wisdom in asking their Realtor to market the property as an amazing home site. A few benefits of doing this that there are no inspections, no repairs, and you can take anything out of the home that you want before closing.
Some readers will try to make financial sense of this concept. The feasibilityhinges on the location. In our company, we once removed a home that was valued at $500,000. When the home was gone, the lot sold for $600,000. Our record tear down is 1M. A beautiful, 290-degree waterfront view lot was hiding under a 1970’s frame house. The purchaser never saw the inside of the home before we sent it to house heaven. 3 weeks later we started a large custom residence that today is one of the nicest properties on the lake. Realtors are slowly getting the idea of looking past an existing home to what the site can offer future owners. The cost to remove an existing home will vary by location. In Austin and the surrounding area an approximate range is from 25 to 50 thousand dollars, depending upon the size and construction of the home. These costs are factored into the “land cost” when making an offer to purchase a tear down home.
Local municipalities have noticed this evolvingtrend and have begun to pass ordinances that regulate the process. In my opinion much of this regulation is good. Historical homes are preserved and cannot be torn down. In some cases, small homes cannot be replaced by mega mansions. One city that I know of stipulates that the replacement home can be no taller than the original home to preserve existingviews. There are alsoregulations that cover disposing of materials such as asbestos, lead based paint and other previously acceptable building materials. City officials do recognize that replacingan older home witha new one increases their tax base, conservesenergy using current technology and often solves existing drainage issues. The best demolition companies today recycle much of the home. Buyers and sellers are not big on the idea of putting perfectly good appliances, lighting fixtures, cabinets etc. in the landfills. Professionals remove these items and donate them to charities such as Habitat, Goodwill and others.
Finding custom home sites hiding under existing homes is not a new concept. However, in fast growth areas such as Austin it is becoming more common and understood. Realtors and buyers considering a tear down purchase should partner with a professional builder with experience in this type of project. The builder can identify costs, regulatory issues and benefits for a site before the final commitmentto purchase is made. The best news is that when all of the squares are filled, everyone in the transaction wins. And, another beautiful home is created on an excellent “recycled” home site.
Austin Builder Hall of Fame
2 Time National Master Builder of the Year
3 Time Austin Business Journal Custom Builder of the Year