Bring in the bulldozer
Get on Top of the Teardown Trend
When clients say they want to tear down and build
from scratch, are you prepared to help them evaluate their options?
BY BARBARA BALLINGER
Since the teardown trend picked up steam in the late 1990s, entire blocks and
neighborhoods have been bulldozed to make way for newer, bigger, and
more luxurious homes. In desirable areas with older housing stock and
scant open land, the movement continues at full force.
For people who are passionate about
historic homes and adamant about preserving a neighborhood's original
character, teardowns are a major threat. Many municipalities are
fighting back with design restrictions, hefty demolition fees, and
lengthy approval processes.
Yet, for buyers who know exactly the kind
of home they want and where they want to live, teardowns can be an
attractive option. When working with clients who are considering a
teardown, you can help them evaluate the benefits and drawbacks of
taking this course.
Reshaping Neighborhoods for Better or Worse
More than 300 communities in 33 states have
witnessed widespread demolition, says Adrian Scott Fine, director of
the Northeast Field Office of the National Trust for Historic
Preservation and co-author of
Historic Neighborhoods: Taming the Teardown Trend.
The affluent Chicago suburb of Kenilworth,
Ill., is an example of how drastically teardowns can change a
community's residential appearance. Nearly 50 homes have been torn down,
half in the last three years, earning it a spot on the National Trust's
2006 list of
America's 11 Most
Endangered Historic Places.
Historic houses are not the only stock at
risk, though their loss may cause the greatest dismay. Any house is
vulnerable if it's on an attractive lot, is close to a downtown, and has
a small or outdated footprint in other words, a house that's less
valuable than the land on which it sits.
Teardown fever has led to the loss of
architectural and socioeconomic diversity, preservationists say. The
houses that replace teardowns are often considered too large for their
lots, leaving little room for trees and backyards. They also block
valued daylight from neighbors' homes.
As proof of just how widespread teardowns
have become (and unpopular among old-house aficionados), the National
Trust compiled a list of nicknames:
When Does a Teardown Make Sense?
"A teardown should be a choice of last
resort," says Robin Diessner, CRS®, broker-owner of Intero Real Estate
Services in Phoenix. However, certain factors in a buyer's home search
could make a teardown a viable option, she concedes.
- Northern New Jersey:
"Bash-and-Builds" and "Bigfoots"
- Denver: "Scrape-Offs" and
- Portland, Ore.: "Snout Houses" are
new homes with protruding garages
- Throughout the country teardowns
also are called: "Trophy Homes," Starter Castles, Big Box
Victorians," "Pink Palaces," "Taras on a Quarter-Acre,"
"McMansions," "Monster Homes," "Knockdowns," "Bulldozers," and
- When location is a must.
If buyers want to be in a certain
neighborhood where existing homes don't meet their needs or would be
too expensive to remodel, a teardown may make sense, Diessner says.
She knows first-hand how important this factor can be; she and her
husband recently tore down their 1963 home, which had structural
problems and poor energy efficiency. They were convinced to tear
down and rebuild because of their irreplaceable view of downtown
Phoenix, she says.
- When it makes financial sense.
architecture experts can perform a cost analysis of remodeling an
existing home versus tearing it down. According to Fine and
co-author Jim Lindberg, real estate practitioners and developers use
the term, "Rule of Three," to gauge the economics: If you can sell a
finished new home for about three times what you paid for the
property, the conventional wisdom goes, a teardown will pay off,
The decision also should be pegged to
the value of neighboring homes. For example, if the property and new
home add up to $1.5 million, and it's near $2 million homes, then
you've still got a "bonus" of $500,000, says Jerry O'Brien, sales
associate at Coldwell Banker in Tenafly, N.J., who has torn down,
built, and sold 13 homes with builders.
- When the buyer is willing to
work within local guidelines.
Municipalities have become very strict
about the size and style of new homes. Staying up to date with
changing guidelines can be a full-time job. "Tenafly's codes change
every year," O'Brien says. Tenafly currently limits new homes to 30
feet and goes to great lengths to prevent tree removals, he says.
The buyer must present a plan that shows which trees will be removed
and pay a $100 tree removal permit for every one to five trees. If
the borough's director of public works thinks the trees should be
replaced, the buyer must post a cash bond of $250 per tree, which is
refunded after a new tree is planted. Tenafly also requires all
curbs to be replaced, even if in good shape. Some suburbs also have
enacted demolition taxes of $10,000 or more.
- When there's not a tight
timeline. Do your clients
have sufficient patience? It can take years to design a house, gain
the necessary approvals for tearing down a home and rebuilding, and
Doing (or Not Doing) Teardowns the Right Way
If clients decide to move forward with a
teardown, they can take certain steps to ensure the home fits in well
with the surrounding area and is accepted by neighbors.
It's smart for buyers to check the look and
scale of neighboring houses before having their mind set on a particular
size or style. They can work with a landscape architect to ensure that
the landscaping will fit in and existing trees can be saved. To build a
good relationship with neighbors who will have to put up with the
construction, clients should meet with them early in the process and
show them what the home will look like, Diessner says.
If clients decide against a teardown, they
may want to reconsider looking for a home in the same neighborhood. "If
at least one third of the houses are teardowns, I tell them that their
house may not appreciate as rapidly (as the teardowns) or may become
valued only for its land," says Doreen Rau, with Prudential Preferred
Properties in Winnetka, Ill.
Sellers Need Teardown Knowledge, Too
When working with sellers in a neighborhood
that's seeing a lot of teardowns, you can help them decide whether to
invest in home improvements or market the home as a teardown candidate.
If the home has a lot of deferred
maintenance or a dated floor plan and is located on an attractive lot,
it may a buyer who wants to start from scratch. Instead of sprucing up
the home for the general buying public, sellers could market the home
"as is" to teardown buyers, including builders, who are tearing down
homes as much as home owners.
"What you're doing in that case is listing
the property for its lot value rather than for its structure," Diessner
Teardown Resource Guide
This Web site, from the National Trust of
Historic Preservation, provides information on the teardown trend,
including a comprehensive glossary of terms that you'll need to know as
you discuss teardowns with clients.
- When clients can handle the
emotions involved. Make
clients aware of the myriad building decisions they must make and
the potential for stress. Building a new home from scratch may sound
romantic, but it can be an emotional rollercoaster - especially when
it's a teardown.
REALTOR® Magazine Online
11/01/2006 with permission of the NATIONAL ASSOCIATION OF REALTORS®. Copyright
2006. All rights reserved.