Use Of Teardowns As Comps...

[Dale Smalley]

I use them to establish land value only. South FL waterfront properties are at a premium for the land. Teardowns of 20-40 yrs old homes are common and rebuilt with the new mega mansion 5-6 mil. The problem comes with the refis of these older homes as people don't want to know the house has little value and is a tear down target. And UW's don't like that 95% land to value ratio.

 

[Jim Onderisin]

The Hinsdale market in our Chicagoland area, has been a really interesting tear-down and rebuild spectacle. There are some houses on 50- to 75-foot wide lots selling at $700,000 and much higher, for redevelopment purposes. I ask you: If a property on a 60-foot wide lot sells for $700,000 and is rebuilt with a new house worth $2,000,000, what is the value of the 60-foot lot next door which has a 6 year-old house fairly similar to the first in size and quality, and which just sold for $1,300,000?

 

[Joshua Fookes]

moh malekpour

I avoid tear down comp for the following reasons:
1- I don’t know how it looked like when it was sold and by looking at the MLS photo is like not looking at the comp.
2- I am not sure if MLS photo is genuine since the property doesn’t exist to verify it with MLS photo.
3- I am not sure what was the buyer’s intention at the time of purchase: keep the existing or demolish and rebuild it.

what if the house was one you had previously inspected personally prior to it being torn down?

You know what it was like when it sold. You can compare it to the subject. If that is the norm for the area (for homes to be torn down) that would have an effect on value.

If the typical buyer for these types of properties are investors, why not consider their purchases?

Josh

 

[Kate]

Originally posted by larryhaskell@Feb 4 2004, 09:38 AM
Katharine:

I don't think it's possible to read a buyer's mind about why they bought a particular property.

Good point. I don't know.

I just remember when that instructor explained it it made a whole lot of sence to me.

Unfortunatle I don't remember all the circumstances. Just that it was obvious that the property was purchased for the lot. That info gave a good comp to the land but not the house.