The residual method is applied for developing land or projects to estimate the value of an undeveloped land. It is used when there are no comparable market prices available. The residual approach starts with a notional value, the gross development value (GDV) from similar projects and less the development cost and also the profit of the developer the residual value (residuum) will be arrived. For the calculation there are many assumptions necessary and the results react very sensitively to even small changes in the input variables. The purpose of this paper is on one hand the theoretically analysis for the sensitivity and on the other hand it presents an empirical analysis based on real input variables for land values in Austria. With the aid of sensitivity analyses the influence of the input parameters are investigated. It is well known and also in the literature it is noted that the residual method is a highly sensitive method of property valuation. The results shows that the sensitivity of the residuum - more precisely, the deviations - depends on the ratio of the property value or the building value to the GDV. The lower the property value or the building value on the GDV is, the higher is the deviation of the residuum. The differences are enormous and the empirical study for Austria shows that the residual method for residential properties is only useful in certain areas.