If you are uncertain whether or not tearing down the house is a good option, here are three things to consider.
Is the house worth salvaging?
Talking to a building professional is always a smart decision when deciding whether to tear down a house. If the house is located in a historic district, there may be limitations to what you can do to the house. Contacting the building department in the city will let you know whether or not you can demolish and rebuild the house or not. Additionally, there may be zoning, wetlands or deed restrictions that could prevent any building plans you may have had for the property.
When in doubt look at the numbers. Figure out how much it is going to cost to buy the house and property, then make the decision based on whether it is worth it to add the cost of building something new. If you can use pieces of the old house and build from there, a complete tear down is not necessarily essential. Be honest with yourself about the estimate. Include big-ticket items such as labor and materials. By subtracting the home's potential market value from the total cost estimate, then deduct another 5-10% for extra luxuries or unforeseen issues, what is left over is probably the best offer you can make.
It is very important that your contract include an inspection clause. This goes for purchasing any home or property. This inspection could confirm whether or not the house is in good shape, or help you back out of the purchase if necessary. For example, what if your home is backed by an environmentally protected area, preventing you from being able to build on the land. It is important that you conduct thorough research when purchasing a home.
An inspector's evaluation of the house could also help make the decision of whether or not to completely start over or work with what you have. Major repairs could cost more than just starting from scratch.
How do I decided between a renovation and a tear down?
Several factors influence the decision of whether or not you want to renovate or tear down a house. Mostly it depends on a person's preference. Are you going to be willing to see the project through from start to finish? Viewing the current condition of the house will also influence the decision. Older homes are more likely to have a lot of problems making a renovation a money pit; mold, infestations, and cracked foundation are just some of the factors that may trigger a decision to just tear down a house instead of renovating.
Deciding what you want out of the house is another influencing component in making the decision to renovate or tear down. Wanting a home to be energy efficient, including new windows, doors and kitchen appliances, can help to save money in the long-run. Also what about the layout of the house, did you maybe have something more specific in mind?
Your budget will also have a large influence on what you decide. If you are able to get everything you want for a reasonable price, a renovation makes sense. If the location is what you like, but the house has too many repairs, it would make more sense to just tear it down and start over.
Financing. Where will your budget go?
If you decide that a tear down is what you want to do, make sure to run the numbers and get an estimate of the total cost of the project. Start with an inspection of the house and the land. Then acquire permits for demolition purposes and future plans. Finally contact utility companies for gas, electricity and water to disconnect the house during demolition.
A unique and cost effective method for demolition is to ask the local fire department if they want to use the house for training. This would be free, and help the firefighters train.
Keep in mind that everything in the house must be brought up to code. Every year new codes are created, and some things may be stricter. It is not unusual that multiple inspections at varying stages of the project may occur.
Whichever you choose to do, a renovation or a tear down, it is important to consider all your options before choosing so that you do what is best for your family.