Home Construction & Renovation – May

These words (except for quotes) are my views and opinions gathered from my experience in home construction finance and do not represent those of my employer.

Teardown & Rebuild…Its Easier Than you Think

Demolition of property for nmew construction
Tearing down to rebuild

A house that may be a good candidate for a teardown is in a desirable location but below the standards of the other homes in the neighborhood. It may be much smaller than average, have serious structural problems, require too many repairs, or have outdated heating, cooling, plumbing or electrical systems. It tends to be priced below the average for the neighborhood and often remains unsold for a longer period, unless it is actively marketing as a prospective teardown.

A Rule of Thumb to help determine if a teardown will support a newly built house is when the value is at two to three times the price of the teardown house at acquisition. For example, if you can buy an older, functionally obsolete house in a good location for $250,000 and a brand new house built on the same lot will support a market value of $500,000 to $750,000, it may be a good teardown candidate.

Once you’ve decided on the neighborhood, contact a real estate agent with experience in teardowns or substantial renovations. Realtors can often recommend potential builders for your project or you can contact the local chapter of the National Association of Home Builders for advice. Some mortgage lenders may also be able to provide a list of approved builders they have worked with on new home construction.

New homes are energy efficient, from the roof, windows, and doors to the heating and cooling system, an important feature for home owners today. They are wired for all the in-home entertainment and modern appliances we use today. The interior layout of a new home is customized for the style of living the home buyer wants for their family. For example, many homes are custom built now for multi-generational living. If these features are important and cannot be attained at a reasonable cost by renovating, then a teardown may be the way to go.

Buying a house in order to tear it down requires planning, some extra homework and some added expense. Demolition costs vary with the size and location of the teardown property, but generally range from $10,000 to $25,000. You may be able to recoup most of the demolition expenses by recycling some of the materials in the teardown by selling the contents or by tax-deductible donations.

Your municipality will require you or your builder to obtain a demolition permit before you start doing anything. You will need to contact the utilities companies to determine when and how to disconnect gas, electric, water services. Check with the fire department to determine what sort of inspections or oversight is required prior to demolition. Local government may also require inspections for toxic materials inside the house, which is a concern if the structure dates back to the 1960s and earlier, when asbestos was commonly used as a construction material in ceilings & duct work.

Can I finance a teardown?

Absolutely yes! Some banks offer mortgage products for new home construction and have a lot of experience lending on teardown projects. One such mortgage product ideally suited to finance a teardown is a construction to permanent mortgage, sometimes called a “one time close” construction to permanent mortgage.

Each construction to permanent mortgage is structured to meet the specific needs of the borrower. A one time close construction to permanent mortgage makes the financing simple. The borrower can focus on their project with peace of mind knowing both the construction financing and the permanent mortgage are approved, the rate is set and all the details for financing each stage from start to finish have been worked out ahead of time.

“The urge to destroy is also a creative urge.” – Pablo Picasso

Arthur Aranda • NMLS #1042093
Construction & Renovation Loans
New Jersey, New York, Connecticut
201-741-1537 talk/text


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Finding A Good Real Estate Agent

Houses Bought As-Is for ALL CASH! Fast Closings!

Buying real estate property involves a series of steps which, conceivably could induce a plurality of different thoughts. Among the many thoughts a prospective home buyer or home seller might entertain, is to do the transaction without the use of services provided by a real estate agent. Most people who buy or sell a home generally think that a real estate agent is a waste of money. Those who choose to buy a new home, think that real estate agents only add to the cost of the home selling / home selling transaction.

What most people aren’t aware of, however, is that while real estate agents are paid by the seller, services provided benefit the buyer in ways that neither buyer or seller may be aware of. Benefits to the seller are common knowledge; they include promoting and advertising the property, qualifying prospective buyers, sharing information about the property with other brokers (via MLS), arranging mortgage financing for the buyer (in many cases), and helping to get the property priced competitively to affect a fast sale.

A real estate broker also provide a number of services to the home buyer, some of which were done on behalf of the client home seller. For example, a real estate broker is usually able to pre-qualify buyer and help the buyer to make preparations for home buying; but one of the most important services a broker provides to the prospective buyer is having the property reasonably priced, which was done – in most cases – far in advance of meeting that buyer.

Most importantly, the buyer gets to work with a professional real estate agent without really having to pay for the services provided by that broker. Policies can vary greatly from state to state and company to company, which is why you should always check any paperwork or contracts that are provided to you to ensure this is the case. When you are interviewing agents, make certain to ask about any type of fees expected from the buyer as well.

A lot of real estate agents out there may work with both buyers and sellers, although most specialize in working with either the buyer or the seller. If you are buying a home, and choose to hire a buyer’s broker to represent your interests, make sure the agent you choose has prior experience of working with buyers in all types of transactions. This way, you can count on your agent to be there when you need him/her the most.

If you are interviewing a real estate agent and s/he isn’t familiar with down payment assistance programs, you shouldn’t hire the agency. Agents who are not familiar with these types of mortgage programs generally aren’t on the level, or they may lack the experience necessary to help you purchase the home of your dreams.

You can also make a list of real estate agents that you can interview based on referrals from friends, lenders, and even family. Lender referrals are normally a great choice as most lenders have worked with their recommendations in the past and both are already familiar with each other. Choosing a lender referred agent can also prevent you from encountering any obstacles or surprises.

When you interview a real estate agent, make sure that you have the agent explain his fees. This way, you’ll know exactly how much he will be getting from the purchase. You should also find out how much experience he has in the field, and how long he has been working with real estate.

You can also ask about sample contracts as well. If you are buying a home, you should make sure that the agent works with buyers. If you happen to be selling your home, then you’ll want to make sure that the agent works with sellers. Agents that are dedicated to one or the other are usually the best to choose, as they will have be more in your corner than agents who work with both buyers and sellers.

Finding a real estate agent is an easy task, providing you know what to look for. If you take things one step at a time and carefully make a decision, chances are that you’ll end up with an agent who has the experience you want. You should always be careful when you choose, and never rush the process.

Real estate agents are easy to find, although finding one who fits your needs and has your expected budget is a little tougher to locate. When you make that final decision, you should always choose an agent who puts your your best interest ahead of the agency’s.

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