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!!

Hi OP, we just tore our house down March 10th. It took them 1.5 days, including cleanup & dump fees, and that cost us $8500Cdn. I don't have pics on photobucket, but if you want to see what's involved just let me know and I'll post a couple. We only tore down to the basement foundation as we had lifted the house in 2003 and tore out the old one, piled, and put in a new one. (Should have just tore out the whole dang thing then...but I digress lol). If you DO decide to tear down, I STRONGLY recommend that you take out the windows yourself. We didn't (couldn't actually cause we were living there right until a couple days before demo) and our yard is COVERED with small pieces of glass that we will now have to pay more for to get cleaned up before re-landscaping. Also, your yard will be filled with small pieces of wood splinters. To clean this up easily, I just used a rake and it worked splendidly. As for your driveway? Alot will depend on how strong it was made to begin with. Our front sidewalk surprisingly survived with very little damage considering all the heavy equipment that was on it, but DH had built that thing like Fort Knox lol. It's too bad we had to tear it out anyways, our new entrance has moved so the sidewalk had to go. Good luck with your decision.

It will all depend on builder. Because builder could make it expansive or cheap. Do not pay $100/sq ft! Is your foundation good, does it need waterproofing, drainage tile, sump? We are in the similar situation our house got severely damaged by tornado, policy has code upgrades, etc. However nasty insurance company determined to cheat us on every corner. They know with severe damage most would not want flooded house, so they would write bad checks that does not include estimate, causing bank to withhold payment; they refusing to pay for flooded fireplace, refused to pay for 3" moldings, stain grade, stain doors, baseboards, damaged sheathing, 12" wavy cedar siding, flooded water heater, furnace, etc etc etc. And this is one of the largest insurer on the deluxe policy. What I learned cost of structure removal is 2,3,4 rule: 2 * sq ft first floor + 3 * sq ft second floor + 4 * third floor. Permitting in my area $800. Staking lot is $600, excavation is $1.10 * sq ft ( for 8' or 9' basement ). Dumpster 2 x xxx. To be honest cost of renovation seems much higher to me than new construction, and idea of avoiding led + asbestos + mold sound pretty good to me. However custom builders in my area suck. Right now prices of plywood and drywall doubled, drywall already came down, however plywood still pricy. It will fall in the next few month. DO your math and research. Call building department, call utilities. See what those costs are. Is your house well flows, in addition I can offer you an advice. If you renovate cost of the house stays nearly the same, if you build ... If your house gets damaged by hurricane: insurance will depreciate nearly everything to the year house was built. Believe me. And it could be 50% - 66% - 77% of actual cash value. Brian

Cost per square foot for remodeling versus building new is always going to be skewed. Reason? To remodel, the existing structure must be disassembled to a point to rebuild. Double labor. New construction is simply building to finish. Single labor. The tipping factor where remodeling is more expensive than rebuilding varies tremendously. If the building requires plumbing/electrical/HVAC reworking plus structural changes, chances are building new will be less expensive. And may be faster. Minor plumbing/electrical/HVAC/structural is always less expensive. In your case, the tipping factor is how much you intend to do. Straightening walls/floors can be a major overhaul, especially when a complete roof is in the plan. Adding bigger windows is a major remodel, and is more expensive than simply replacing windows. Reason? Sheet rock has to be removed, exterior siding has to be removed past the dimensions of the new windows to allow proper framing of the new openings. New window costs, labor to tear out, and labor/materials to replace sheet rock/siding. If the siding cannot be reused(after being removed) new siding has to be bought/installed/primed/painted. Replacing four windows can easily require residing that entire side of the house. Leveling floors will require tearing out the old, repairing/replacing the joists. Same with the walls. Roof may need complete rebuilt to be right. Rip off all the old roofing/sheathing/rafters and rebuild from the top plate of the walls. Could all that be done without all that tearout? Not if it is done right.`