How do you value an empty lot from a burned down house?

[Joe S.]

How do you value an empty lot from a burned down house?

[Jay Hinrichs]

Originally posted by @Joe Splitrock:

As others mentioned, look at the cost of lots of in your city, but you also have to consider the location. A bad location could make the lot worth less and a good location could make it worth more. The other factor that affects value is if the burned down house was properly removed. The lot may require some extra development work to remove a foundation or debris, which could affect value. 

One thing that could potentially add value is rezoning the lot to multifamily. Some older lots are larger and may accommodate a duplex or larger.  

As they say in real estate, it is worth what someone is willing to pay! Are you selling or buying or just curious?

 its all about location.

in many markets were existing houses sell for less than replacement costs then the burnt down houses and the lots they are on have negative value.. 

example  house in South Jackson MS that can be bought as a rental for 50 to 70k  1200 sq feet  replacement of the home even at 100 a foot which is tough is 120k . but all your comps are 50 to say 90k max..  lot has no residual value ..  Other way to look at it is there ANY new construction if there is none then lots have zero value.

Now go to flip side  houses in good areas of A and B with robust infill building and houses selling for 200 a foot and up.. can be built for 100 to 150 a foot this leaves some room for residual land value.

when buying lots a rule of thumb depending on the area is if a new house will sell for X then the lot value is 1/3 rd to 1/5th of the total value and work math backwards..

Now this is thrown out the window in a area like Silicon valley or Palo Alto to be specific were tear down houses are 2 mil plus and it only cost 1 mil to build a nice home but said new home will sell for 4 million for a 2k sq ft new build .

Personally I go for the 1/4  if I have a 600k exit 150k would be max for the lot.. and most other spec builders will run the math pretty close to that as well.

and of course out of that 150k if there is a burnt down or tear down you have to deduct the cost of remediating the lot to city standards.  One thing as mention above depending on the city you can save big bucks by replacing homes as your SDC and building permits are a fraction of a true new build.. IN my home town Lake Oswego SDC and building permits for a 3k sq ft new build will run close to 75k before U do anything.  In Charleston Sc were we did a bunch of infill building and SDC were only 5 to 10k for 600 to 2 mil dollar homes.  but building cost there is higher.