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How Much Does It Cost to Demolish a House?

Demolishing a house can be pricey, depending on a number of different factors. Expect to pay anywhere between $5,000-$20,000 for a 1,500 square foot house. The more planning you do up front, the more you'll likely be able to save on the project.

Demolishing a house can be pricey, depending on a number of different factors. Expect to pay anywhere between $5,000-$20,000 for a 1,500 square foot house. The more planning you do up front, the more you'll likely be able to save on the project.

Whether you’re looking to buy your neighbor’s property and demolish their house to clear out a view or simply want to knock down an old house to make way for a new one—it’s going to cost you money. How much money does it cost to demolish a house? Well, that depends.

How Much Does it Cost to Demolish a House?

The entire cost of demo-ing a house varies depending on many different factors, but generally runs you anywhere from $5,000 to $20,000 for a 1,500 square foot house. Before you go at the house with a sledgehammer, however, there are a few things that you need first.

Approval for Demolition

Unfortunately, you can’t just wake up one morning and decide to knock down your house.

Check with your city to see if there are any ordinances in place for demolishing a house. Many locations have codes for destroying what they often call “historical property.” If your house falls under that label, you may need to have a back-up to your demolition plan.

If your neighborhood has an HOA, you can almost count on having a rule about demolishing the house. Even though those rules get created by you and your neighbors, you may have a tough time getting them on board with your plan. In many locations, just “not telling” your neighbors is actually illegal. You must give them a letter notifying them of your demo plans.

Beyond the basic permits and approvals, you’ll need to ensure that the house doesn’t have any asbestos, or you may need to splurge for abatement before you demolish the rest of the house. Checking for asbestos is as quick and easy as about a $100 test and a few days.

A Chicago-area teardown real estate specialist, Brian Hickey, told NewHome Source that a teardown should be able to support a new house that, when complete, is valued at two to three times the price of the teardown acquisition.

This means if you’re looking for more support in favor of your demolition, you’ll want to have a plan that makes the property two-to-three times the price of the original house.

Financing a Demolition

If you’re buying a house to demolish it, you should plan on the mortgage company putting up a bit of a fight. That’s because your loan is based on the value of the house, which if demolished, destroys their chances at any collateral. Financing, therefore, will be tough.

You may be able to leverage your current home equity or use a combination of cash and equity to fund this adventure.

Construction Loan

If you plan on using cash and a loan, you’ll need to show the bank that you have a good fall back plan, as well as plans and budget from a good architect and contractor. You’ll also want to stop by your city’s planning commission and ask what the process is before getting any sort of financing.

From there, you’ll want to get a construction loan. This loan will pay off your current loan and give you the money you need to complete your project, based on the price provided by your architect and contractor. Once you build this home, you can get a loan against the house and pay off the construction loan.

This route contains a fair amount of risk, as construction loans often have balloon payments within a few years that you’ll need to pay it off.

HUD Exchange Program

If your home is considered blighted you may be able to get financing through the HUD exchange program. The HUD exchange program provides funding demolish blighted structures. To find out more about this program, go here.

Additional Financing Options

There may be additional local or state-level financing options available to you as well. If you're considering purchasing a home to tear down, your real estate agent may be able to provide guidance on good lenders in your area.

Renovation or Demolition?

While your city will often decide that for you (based off their rules and regulations for a demolition), it all depends on the property. If the property needs major repairs—more than the house is worth—than you might want to go the demolition route.

Often, homes that fall into this category have severely outdated electrical and plumbing, water damage, insect or rodent damage, and need a new roof.

If the city considers the home habitable, it’s most likely going to be a candidate for renovation or remodeling.

How to Save Money On Your Demolition

Since you’re most likely knocking down a house to build another structure, you’ve probably got a budget in mind for the entire project—with most of it hopefully going toward the rebuild. There are some ways that you can save money during a demolition. Here they are.

DIY

Who doesn’t love Chip and Joanna Gaines off of HGTV’s hit “Fixer-Upper”? On every episode, they have a “Demo Day” where Chip and his crew go in with crowbars and sledgehammers. They rip out old cabinets and knock down old walls, until the house is demolished or they are satisfied.

Once you’ve got the ok from the city, you can pretty much do the same! Gather up a few friends or family members, give them a few hammers and prybars, and have at it. While this does cost you in time and hard work, it won’t cost you nearly as much as it would for a professional to come in and do it.

Salvage

Whether you do the demolition yourself or have a crew come in, a great way to recoup some of the money is to sell the copper and other metals and items from the home’s interior and structure. If there are appliances in the home that are worth selling, sell those before you start the demo project. If there are cabinets, fixtures, or woodwork that you can sell or donate—do it.

Remember that you are responsible for hauling the debris away as well, and that also costs money. Donating as much as you can as well as selling what you can will help reduce those costs.

Shop Around

There are many different professionals that can help you through the demolition and rebuilding process. Make sure you choose those that have your best interest at heart and who will give you the biggest bang for your buck. Get quotes from multiple contractors and architects before you settle on one. If you get a loan, shop around to different lenders and make sure you get the best interest rate.

The demolition process is often a painful one if you don't prepare for it. Make sure you have plans drafted out and in place before going to a lender for the best results. The entire demolition process can run anywhere from $5,000-$20,000 for a 1,500 square foot house, so be prepared with as much cash as you can.

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Luke Babich

Luke Babich is the co-founder and Chief Strategy Officer of Clever Real Estate, the free online service that connects you with top agents to save money on commission. He's an active real estate investor and licensed agent in St. Louis, with 22 units currently. Luke graduated from Stanford University and subsequently ran a historic data-driven campaign for University City City Council. Luke's writing has been featured in Homeland Security Today, Mashvisor, Payments Journal, and Bigger Pockets.

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