Cost Approach

Method of appraising property based on adding the Reproduction Cost of improvements, less depreciation, to the market value of the site.

A method of Appraising property based on the Depreciated Reproduction or Replacement Cost (new) of improvements, plus the market value of the Site.
Example: Table 14.

Table 14 Cost Approach

Reproduction cost (new) $100,000

Minus: Physical deterioration $25,000

Functional obsolescence 10,000

Economic obsolescence 5,000

_______

Total accrued depreciation $40,000 - 40,000

________

Depreciated value of improvements $ 60,000

Add: Site value 20,000

________

Value indicated by cost approach $ 80,000