Ilyce Glink and Samuel J. Tamkin of The Washington Post write a good primer on how owners of homes that are beyond redemption should proceed when a builder offers to buy. According to the writers, typically, the builder will pay one-third of the future purchase price for the land, spend another third on building and marketing the house, and the last third would be profit.
Before you sell your home to a developer or builder, you have to understand what the value is as the house stands today (as a teardown or quasi-teardown). For that, it’s helpful to do a comparative marketing analysis. Ask three real estate agents (from three different firms) to come in and tell you the price at which they’d list your home.
The agents may tell you that because of the tear-downs in your neighborhood, you won’t get that much money for your house unless you do a major renovation.