Beware of one thing when dealing with a bank and doing a teardown - unless you make it very clear to the bank that you intend to tear the house down, they will end up being very concerned when it starts to come down. We recently had a situation where we bought a house and took out a mortgage for only about 50% of the bank-appraised value. We bought the house because it was a fixer-upper and we wanted to tear it down and rebuild. It was in very bad condition, and everyone else looking at it during the time we were making an offer on it felt the same way...there's no way someone could have lived in the house for long without fixing it up. We even told our mortgage contact at the bank that we were planning to tear it down and rebuild (with our own cash not a construction loan). He seemed supportive and commented many times on what a great lot it was and how nice it would be when the house was "done." So, it was clear to everyone involved that it was planned to be a teardown. Long story short(er!) - we bought the house in Sept, and in January, when we had our completed architectural drawings, structural drawings, had received building permits and were ready to start demolition, one of the final items on my list was to obtain "course of construction" insurance, which takes the place of homeowner's insurance when you are dealing with a construction/teardown project. In the process of signing the insurance documents, I noticed that the insurance company wanted to know if the bank should be listed as an additional payee in the case of a claim. I called the bank to ask if they're typically listed on a course of construction insurance, and after speaking with a few different representatives (none of who knew anything!), I was transferred to the office of the VP of Risk Management (or something like that)...anyway, someone on her staff almost had a fit when they heard that we were about to tear the house down. She kept saying that our house is the "bank's collateral" and not ours to do what we wanted with and that we could not proceed until we had the appropriate bank approvals, etc, etc. Keep in mind that we were not asking for the bank to pay for the construction, we are paying for the construction in cash, and we had an appraisal (done by the bank's OWN appraiser!) that was completed in September which showed the value of the entire property to be $1,100,000; they even broke this down between the lot value (approx $950,000) and the house value (approx $150,000). We have a mortgage for $500,000 so obviously, even in a worst case scenario, if the house was torn down and never rebuilt, the bank has FAR more collateral in the land than they ever had in the rickety old decrepit scary house!! Still, this person INSISTED that she had to go to some sort of approval committee and get approvals before we had a demo truck even enter the property. My husband and I were furious (although also somewhat bemused by this bizarre lack of logic and ridiculousness) and we spoke with several others at the bank who listened to our story and believed us when we told them that we had been very clear with the mortgage person during our loan approval process, telling him all the time that we were buying a "teardown"!! Our point was that, if there were further approvals necessary, he should have told us about them up front. Finally, we had a senior VP reluctantly agree with us but we are still being hounded by this VP of Risk Mgmt who is still insisting that we need to forward her a copy of our contract with our builder, our approved architectural/structural plans and all kinds of other info! At this point, we're ignoring her (because we have the approval of the senior VP), and construction has started, but this has been a big pain and total surprise. I'm telling you this long story because it just illustrates how crazy and upside-down the banks are these days and how their underwriting/loan approval processes have gone wildly from one end of the spectrum (super wide open) to the other (absurdly tight). My husband and I are the perfect clients for them - we have stellar FICO scores, have a longstanding history of repaying all our prior mortgages (two of which were with them), and MOST importantly, the bank has MORE than enough collateral in our current property to cover it all even if we never paid another dime!! So, I'm sorry to say it, but like others have basically said, I would be surprised if you get a construction loan with your current situation, and IF you decided to and could somehow do it on a line of credit or home equity situation, BEWARE that the bank will have a fit if/when they find out that you're tearing your house (otherwise known as the bank's collateral) down. Sorry, I don't mean to be a bummer about all this but it's best to go into it with eyes wide open and know the current lending/housing environment. Whatever you do, best of luck!!

First step is getting a sense of what your budget is. Next - this is a tricky topic here. This board believes STRONGLY in going the architect route. We are doing that, and there was never any question that we wouldn't. BUT it is definitely more expensive. And definitely worth it. But people have different budgets. If you are dealing with a reasonable non-shoestring budget, then yes - DEFINITELY hire an architect. But whether to go to a builder or architect first - there are mixed opinions on this. If a friend has a recommendation for an amazing builder or architect, you should look into them. (If you really think you are going to go with a stock plan instead of an architect - which again, I don't advise - you definitely should interview and choose a builder first. They WILL have specifications on what they will and won't do. If you are looking at eco-friendly, guaranteed if you have a builder who does this without a custom architect it is because s/he builds a very specific design. You're wasting your time and money looking at plans that your preferred builder may not be willing to build.) Otherwise - you say you want eco-friendly. That is not going to be hard to find in Washington State. But it is still something that only select builders and architects do well. If you want to go as energy efficient as possible, you are talking Passive House. Which is expensive. However, it gives you a good framework to start looking for builders. You don't have to go to the expense of pursuing full Passive House requirements. But this will narrow down your search specifically to builders who build eco-friendly homes. Again, this only matters if you are serious about eco-friendly, as in this is the area you would prefer to focus your budget on, as opposed to tile and molding and cabinets and the like. If you are, this is not something a regular builder does. Or at least does well, in my experience. There is a huge difference between a builder who thinks foaming all the walls constitutes a well-sealed home, and a builder who does blower door tests to ensure they have plugged as many tiny leaks in the envelope as they can find. Architecture also plays a big part in designing an eco-friendly home, and there are architects who specialize in it. Again, search for passive house architects or green building architects. (Personally, I would look at builders first if you are SERIOUS about eco-friendly. Sometimes green builders do things in very particular ways, such as SIPS or modular, and you would be better served finding that out first and choosing an architect they work well with.) You will get a good sense of what is out there. Narrow down a list of professionals, and then contact them. You will probably rule several out over the phone, just based on budget requirements and other issues. Then meet with whose left and go from there. They will definitely have answers to your listed questions. And for questions like timeline, those answers will vary quite a bit between builders, so will perhaps play into your hiring decision.

It’s not the appraised value of each individual piece. It’s the appraised value of the project as a whole. It does not matter at all what the lot costs, or the constructions costs are. Costs are irrelevant to how much the bank could sell the house for if you defaulted. That is all anyone giving you a loan cares about: the value of the collateral. If you want to build a 1M house on a lot that you paid 1M for, but the surrounding area is trailer park central, and the lender thinks the whole project would sell for 500K, if you were lucky, then you are gonna need to bring 1.6M to the table to make it happen. Buying two lots only makes the end value worse. Larger lots do not appraise gor very much more over smaller lots.

First, you need to determine if anyone is willing to take on your project as a custom build. With a budget of $350K to $450K including the lot--and, I assume the cost to design the home-- I suspect your choices of "custom" home builders will be limited. If you determine there are a number of candidate builders, I recommend you not waste your time and theirs asking about what kind of drywall they use, etc., because you're not purchasing a product. You're purchasing a service. Focus on the process of building a home. You want to understand how each would take you from design to completion. Ask process-relate questions: how would you approach my project? How do you determine the construction schedule and how do you manage activities to achieve it? How do you determine the construction cost? How do you ensure completion will be on-budget without the "surprises?" How do you manage changes and how do you price change orders? How much on-site supervision is there? How often do you update us on the project and how? What about on-site meetings? You get the picture.