This regularly scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. Please submit your questions to him via email for response in future columns. Video summaries of some articles can be found on YouTube on the Eli Residential channel. Enjoy!
Question: Do you have any experience with deconstruction companies when tearing down an old home?
Answer: If you are planning to demolish an old home (or doing a partial demo) to build new/remodel, you should consider deconstruction rather than demolition for a multitude of reasons including environmental and financial benefits.
I personally have experience with Second Chance out of Baltimore, Maryland but I believe there are other companies with a similar business model. My experiences with them have been positive and I would suggest that anybody planning a full or partial demolition job consider them/deconstruction.
What is Deconstruction?
Deconstruction is an alternative to blunt force demolition whereby a home (or parts of a home) are disassembled using manual labor in a way that preserves the materials so they can be reused and for materials that cannot be salvaged, separates out the materials that can be recycled.
The workers who perform the deconstruction labor are trained in how to disassemble a home/room to preserve the materials for reuse, even materials you would think cannot be salvaged or reused. The teams they send for deconstruction are huge and they can often deconstruct an entire home in less than a week.
Environmental Benefits
A normal demolition results in everything being sent to the dump — concrete, insulation, tile, appliances, electronics, plastic, drywall, flooring, windows… all of it. You’d be shocked at the amount of building material that can be reused and recycled with a little bit of time and effort.
There is also the added environmental benefit of using less heavy machinery during demolition since the deconstruction process is done by hand with manual labor.
Financial Benefits
Second Chance (and, I believe, similar companies) is a 501(c)(3) non-profit organization and is able to provide homeowners with a IRS-approved donation valuation for the deconstruction and salvaged materials. The value of the salvaged materials can be significant, often in the $50k-$150k+ range for an entire home, all of which can be applied as a tax deduction for the homeowner. A third-party appraisal company is used to provide a highly detailed accounting of the donation valuation.
Second Chance does require a donation pledge after the work is completed to cover some (maybe all?) of their labor costs, but this donation is also tax deductible because it is to a non-profit.
Access to inexpensive, salvaged building materials via the Second Chance warehouse/store in Baltimore provides many people and organizations access to construction materials, appliances, furniture, etc at a deep discount to retail prices which helps schools, small businesses, churches, community organizations, and everyday homeowners.
Local Employment Benefits
The deconstruction labor is used to provide vocational, real-world job training and experience to underemployed and unemployed people — often those out of the prison system looking to rebuild job skills.
Process and My Experience
Having worked with Second Chance before (and being impressed with the service throughout), here’s a summary of how I recall the process working:
- Submit a project intake/description form
- Schedule an appointment with a third party appraisal company (I’ve worked with Green Donation Consultants) to provide a free estimate on the donation value of the building materials that can be salvaged
- Determine if you want to do the deconstruction project once you have an appraisal estimate and Second Chance calculates the required donation pledge
- Deconstruction scheduled (usually within a few weeks in my experience)… note: they deconstruct as much as can be salvaged and deconstructed with manual labor, which doesn’t include foundation and some other parts of a home
- Final inventory of salvaged materials and final donation valuation calculated
- Appraisal company and Second Chance complete an IRS-approved appraisal report for the tax deduction
The only thing I remember being frustrated by was at the end of the process when it came time to prepare the tax documents from the final appraisal report, I needed to pay for an additional service from the appraisal company to prepare the forms I submitted to the IRS. I could have tried it myself or my CPA could have tried to, but it was complex and opened me up to tax risk I wasn’t willing to take if it wasn’t done exactly right.
So I felt burned at the end when I had to pay for that extra service that I hadn’t budgeted for, but overall my experience was smooth and efficient enough that I think the deconstruction alternative to traditional demolition is something more people should consider for tear downs or remodeling projects.
If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at [email protected].
If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at EliResidential.com. Call me directly at (703) 539-2529.
Video summaries of some articles can be found on YouTube on the Eli Residential channel.
Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with RLAH Real Estate, 4040 N Fairfax Dr #10CA