custom home building/developing in the Heights

[Mark Sewell]

Let me see if I can formulate my question -- this is for anybody here that has had any experience with custom home builders that knock down old, small, 1950-era houses and put up 3,500 - 4,000 square foot mini-mansions that go for $800-$900K.

I got a seller that has asked me to come look at their house down around 610 in the Heights.  They are thinking they are going to get $400k plus for this thing.  They aren't.  They see median home prices running $600K or so, and those are influenced by all these cool developers ripping out the old and put up brand new crazy-gorgeous glamorous homes -- literally million dollar homes in some cases.

There are several houses in that area, very similar, same everything, that have been fixed up (in their current size and floor plan configuration) and flipped for around $285K or so.  So I get that deal, just a standard fix/flip like any of us would do.  But honestly, an investor really couldn't pay very much to get into that deal.  

Now I suppose the math would not be radically different in the case of the local developers buying the property and bulldozing it.  Or would it?  I wonder if those folks would pay even a bit more, depending on the location. I would imagine they'd pay even less... but looking for some insights here.

I don't have it under contract (not yet anyway) and the seller is going to be reviewing whatever offers they can get.  I simply have been invited to come view it, since I had reached out to them with my marketing in the past. 

Just wondering if there anything 'particular' to know or take into consideration when looking at these bulldozer special deals.

Sorry for the rambling, and thanks in advance.