Sometimes there really isn’t any value in a house. I’m working on an appraisal right now where the cost to demolish the house looks to be the only “value” the structure is bringing to the lot. When a house has very poor workmanship, a shoddy foundation, does not conform to current code in any sense and is all around sub-par in quality and construction, it’s not too likely to be a positive contributor for value.
Improved Site – Cost to Demo = Market Value
In a valuation like this I would not just consider the raw land, but also the contribution of value for any other improvements too – namely water and sewer on the site (hence the term “improved site”). But the cost to demolish the property also must be considered in a case like this because a buyer in his right mind wouldn’t pay money for an inhabitable house that is well beyond a reasonable cost-to-cure.
The moral of the story? Just because a house exists does not mean it has value. In so many cases a house can be salvaged, but in some cases a house just needs to meet a bulldozer instead.