My sisters and I will be inheriting a house in the coming years in Palo Alto, CA .
It has not been maintained the past 40 yrs but is in a prestigious area. It will likely be a "teardown" for a very valuable lot ($1.5 - $2 million).
What would be the issues of selling a house that likely would be torn down? Does that greatly limit who would buy it as they would have to buy it outright in order to tear down?
Your thoughts are welcomed.
Thanks! Jon
Hi Jon,
The main issue of selling a house that would” likely” be torn down is that a potential buyer may not want to tear it down and may not fully understand that you are selling a house truly “as is”.
Not everyone views old, neglected houses the same way, and may want to remodel it. And, few people really understand what “as is” really means, so watch out!
I strongly advise you to employ an experienced Realtor® to both advise you in the listing and sale of this property.
If the “as is’ clause is not properly written and explained, you could face problems after the sale.
You may even be advised to tear down the house before attempting to sell the property.
As for your concern about limiting the marketability to someone who would buy it outright, that may not necessarily be true. It would depend on the “site value” of the property. The site value is the value of the land without the house.
If the land by itself appraises high enough (market value) a buyer might be able to get a lot (land) loan from a bank or credit union. A very hefty down payment would be required (as in all real estate today) but if the lender makes the lot loan with the knowledge the house is “coming down” they could care less.
If someone were going to build a new house right away, they could obtain a construction loan for 75% of the finished new house project (including land cost).
Most new construction projects now require at least 25% of the completed project costs as down payment, which in all likelihood would mean that yes; they would have to buy your property “outright” as that would be most, if not all, of their down payment.
Simple? No! Get local professional guidance.
Besides a Realtor®, I would also consult with a local Real Estate Attorney.
Be sure to read my article on byoh.com, Tear Down a House - Demolishing a House - Rebuilding a House.
You will also find a link to a video of tearing down a house.
Good luck,
Carl Heldmann, byoh.com