How we figure an offer on a teardown

The formula, in words

Our offer on a teardown comes down to one line:

What a builder would pay for the cleared lot, minus the cost to clear it, minus the cost of holding it while that happens, minus a cushion for risk and our work.

That is it. The house itself adds little or nothing to the number, because it is coming down. A new kitchen from ten years ago, or a roof that needs replacing, barely moves it.

Step one: what the land is worth to a builder

A builder decides what to pay for a lot by looking backward from the house they plan to build. They ask: what can legally go here, what will that new home sell for, and what will it cost to build? What is left over, after their own profit, is what the land is worth to them.

That is why lot details matter so much:

• Width and frontage. A wider lot can fit a wider house or a better garage layout.
• Zoning and setbacks. These set how big and how tall a new home can be.
• Double or corner lots. These can sometimes allow more than one home, or a larger one, but only if local zoning allows it. That always needs to be checked.
• Location. What new homes nearby sell for sets the ceiling.
• Flood zone and elevation. These affect how high and how costly the new home will be to build.
• Trees and historic rules. Protected trees or a historic district can limit what can be built, or whether the house can come down at all.

More on this in what builders look for.

Step two: what comes off

• Demolition. Permits, utility disconnects, an asbestos survey and any required abatement, the teardown itself, hauling, and grading the lot. See what demolition takes.
• Clearing what is left inside. Since you can leave what you do not want, we handle the clean-out.
• Holding costs. Property taxes, insurance, utilities and financing for the months between our closing and the builder's.
• Closing costs. We pay normal closing costs on the purchase, and there are costs again on the resale.
• Risk. A permit takes longer than expected, a survey turns up a problem, the market softens. Someone has to carry that, and in a cash as-is sale, it is us.

A made-up example, just to show the shape

This is a hypothetical illustration with round numbers. It is not a real property, a real price, or a typical deal.

We used dollars instead of thousands on purpose. The point is the order of operations, not the size of any number. Every property is different, and your offer will come with its own reasoning.

Why this can beat selling it as a house

A regular home buyer prices a house by how livable it is. If the house needs a roof, plumbing, wiring and AC, that buyer subtracts all of it, often more than it really costs, because repairs are scary. Many cannot get a loan on a house in that condition at all. That shrinks the pool of buyers to investors who want to fix it, and they price in a full renovation.

A builder does not care about any of that. For a small, worn-out house on a good lot, the land value can be higher than what the house would fetch as a house. That is the gap we work in. Read sell to a builder or list it for a side-by-side look.

When listing would net you more

If your house is in decent shape, the lot is ordinary for the street, and you have time, listing with a good agent may put more money in your pocket even after commissions. When that is clearly the case, we will tell you. Our offer is below full retail. What we offer in return is certainty, your choice of closing date, no repairs, no clean-out, and no waiting on a buyer's loan.

We are not attorneys or CPAs. For tax questions about selling a home you have owned for decades, talk to a CPA.

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General information, not legal, tax or zoning advice. Every lot is different; local rules decide what can be built. Updated November 2026.