How to Value A Wholesale when the HBU is as a Scrape?

[Burt L.]

I've been in discussions with a seller about their abandoned property with bad foundation and missing kitchen, which is certainly a property in bad shape. They don't want to have the property restored. It has an assessed value of 230K and sits between an 800K house and a 600K house.

They want 280K for it as a scrape, and there are $1 million dollar homes futher down the street. The larger homes are in the 3000+ sq. ft range and this one is 1200 sq. ft.

My experience has been with rehabs only, not scrapes. How does one get to the demolition costs, ARV, and building costs? Looks like the buyer would be a builder instead of a rehabber. Apparently this is what in happens in a blistering, hot market. Unfortunately, I haven't heard this matter included in educational materials for wholesalers, etc.

How do you approach the matter when the seller wants 280K for a property appraised at 230K - which assumes it is a functional property and its not - and the seller is likely correct in the new Highest and Best Use?