Improved Site – Cost to Demo = Market Value

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.

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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.

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

Comments

    • says

      I’m still working on my property too to find out if it was even built legally, which is another issue. Ultimately, legal or not, it’s subpar on so many levels. I like how you said “Mr. Bulldozer”. Nice, Tom.

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