Emilie, there is no definitive answer to this question without seeing the particular property. In the heady days of teardowns in Winnetka, (2001-2007) land was often more valuable than the house that sat on it. In that case, it would not make sense to do anything to improve a property that was certain to be torn down and replaced. During that period, the competition for buildable lots among the "tear down builders" had squeezed out the entry level buyers from the market.
This calculus has changed dramatically in recent years. While there has been a return to the market for builders in the past year or two, the prices they are paying for the property has been reduced greatly.
At the same time, more buyers are stepping up and purchasing the older homes that may be in need of some work, but are being offered at reduced prices. This translates into a situation where a house which can be utilized by a new buyer generally has more value than the same property to a builder who would tear it down. Of course, this is not always the case, and if there are serious infrastructure problems or if the home is in a highly desirable location, it still may have more value as a tear down.
My recommendation would be to have a real estate professional with a strong knowledge of the local market give you a market evaluation.
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