Remove all of your gear from the house or you risk loosing it as it will all fall to the ground free to any vulture that might be passing by.
Do not demolish the house... Instead, stand under the house sign and say "I wish to resize my house". This will effectively demolish the house, but still reserve the plot for you for one hour to give you time to test placement, sizes, etc. and replace it.
Before you start the process, look at your house sign and make sure that it is properly placed so in the worst case, you can replace the exact same house.
Also, you might want to go to test center and see what will fit in that spot to make sure you are making the most of it. I sometimes also go to other shards to see what others were able to place.
Lastly, make sure your account has not received another house in the last 7 days or you can possibly be stuck on a timer there and will not be able to place another for 7 days.