Land value less cost to demolish = PV?

[Mark K]

The AI courses instruct that if an expenditure is necessary and anticipated to be made immediately by the buyer upon closing, then it factors into the market value of the subject (added to the sale price, in most cases).

I agree that they should factor into the MV but I often see the effect on MV as being not equal to a $ 4 $ adjustment. Sometimes more, sometime less and it seems to depend on the overall market conditions and the desirability of the subject property more so than the actual C 2 C.

As usual it depends on the unique property. The cost to remediate is not always a $ 4 $ adjustment (the proper method for sales concessions ).

 

[Elliott]

I'll throw in my two cents. The market value is how the market sees the
building razing. For example, if the cost to raze is $1,000, but it also opens
up a potential can of environmental worms, the market might say, "I'm discounting
my price $5,000 to get rid of the fricken building cause I'm taking on that responsibility
because the current owner is too lazy to do it."

 

[CANative]

Actually, after reviewing the numbers I think they sort of agreed without going so far as admitting it (they all have to answer to their superiors who have to answer to a board.) They lowered the value using a $/sf land value that was lower than mine but left the $1,000 building value alone. So instead of using my $200k costs they used about $60k with a $4/sf lower land value than I was coming up with.

I think they didn't want to hassle with the HBU concept.

 

[CANative]

I'll throw in my two cents. The market value is how the market sees the
building razing. For example, if the cost to raze is $1,000, but it also opens
up a potential can of environmental worms, the market might say, "I'm discounting
my price $5,000 to get rid of the fricken building cause I'm taking on that responsibility
because the current owner is too lazy to do it."

Or unable to do it. Some people are land rich and cash poor.