Selling a fire damaged rental property?

[Daniel G Blais]

My father has a rental house that recently burned down.  While much of the structure is still there the support beams that hold the weight of the house is damaged.  So it has be categorized as a total loss.  We have been discussing what to do about the house as rehab costs are far beyond what insurance will cover by about $100K.  So my suggestion to him is to sell it and take the insurance payout and the money he gets from the sale and reinvest in a new property.  My thoughts are that it would be faster this way to acquire a new income generating asset than to wait the 8-12 months for reconstruction.  

I'm not sure on the square feet of the land itself, but it is large enough that if you were to demolish the house you could sub-divide the lot into two.  You would just need to install water and sewer for the second half.   The insurance company will cover the cost of demolition up to $10K.  Estimates however, are clocking in at about $20k.   Which my father is willing to cover.  We have entertained a few offers which have been underwhelming.  One person offered the tax evaluation value of $110K for the lot as is another offered $85K as is.  My father is looking to get 150K as it is a fairly large piece of land in a high demand area.  When all is said and done if he had the resources he would develop it into two rentals himself.  Sadly he does not.  (if it matters the value of the property before the fire was $347K roughly)
Time is also an issue so waiting the time for building is not realistic for him.  

To my question...    Would he be able to get more money out of the land with the burned house gone?