Due to the pricing dispute of housing demolition between related parties, the progress of demolition has been slow down. Therefore, this paper empirically analyzes the demolition case in the environmental remediation projects of village, located in the southeast corner of Yong'an Road, Haidian District. First, a real-option pricing model of binary tree for compensation of urban house demolition is constructed. Then, an empirical analysis of the demolition compensation price is carried out. Compared with the actual monetary compensation of government, this paper verifies the unreasonableness of compensation pricing of government demolition. Finally, the paper summarizes the advanced nature of binary tree option pricing model for house demolition compensation from four aspects of solution, decision-making, method design and uncertainty.