Real Estate Appraisal Using the Liquidation Cost Method – A Case Study

Abstract

Abstract A real estate appraiser, using the liquidation cost method of the mixed approach in order to determine the value of real estate, analyzes, e.g. the value of post-demolition materials and the costs of liquidating components. The paper presents the problem of determining the costs of demolition works, which are correlated with the adopted demolition technology, the method of managing waste from post-demolition materials, and the costs incurred to maintain the occupational health and safety of employees and bystanders. Important elements of determining the demolition costs include the type of demolition waste and the relevant classification subgroup, the used demolition technology, and also the method of managing waste materials. The publication presents a calculation example that concerns the cost analysis of the demolition of a building structure. The demolition was performed using the mechanical method. The presented analyses cover different variants of carrying out works, whereas optimization refers to the different types of equipment used, available employee resources, and the various ways of recycling/managing post-demolition materials (storing, resale or processing). The conducted analyzes allow a multi-faceted approach to the subject matter to be obtained, and also an optimal solution to be selected by the participants of the investment process.