This past weekend, I happen to drive by a house that appeared to have a real estate brokerage sign in front of it. Not an unusual sight these days. However, it was the name that caught my attention: Teardowns.com.
The house appeared undersized for the neighborhood relative to its lot size, it was dated in appearance and did not appear architecturally significant. In otherwords, it looked like a teardown. After I saw the sign and took a double take, trying to imagine what the listing pitch would have sounded like.
Its a great house, Mr. & Mrs. Smith. I know you have raised your family here andhave owned the home for nearly 40 years – you’ve done a nice job with it. Thats why I think we can get more money for it if we tear it down…
When I read more about the Teardowns.com service, it sounded like a reduced commission, bulk sale sort of concept, directed to builders looking to buy properties for spec housing. The property owner gets to sell their property for a reduced commission, netting more at close. The property is not listed in the MLS and buyers pay no fees for access to the listings. A quick survey of the listings in my town (2) seemed to be priced on the high side, consistent with past experience with teardowns.
When I was looking for a new home a few years ago, I found that if we stayed in the same price range but went after a property with more land or more square footage but needed a lot of work, we were competing with builders who would nearly always pay more than what individuals where willing to pay. That was because the resulting teardown-to-McMansion would net out a greater profit and they were desparate for properties to develop. Buyers like me couldn’t justify the 10% to 20% premium.
Today, with the general oversupply of speculative housing, aka McMansions, this marketing concept appears to be short-sighted. Its segmented exposure primarily to builders would likely limit the pricing to be achieved.
Teardowns.com seems to be yet another niche service created by the housing boom that might now be torn down.