The value of a
property based on the analysis of costs
associated with the reproduction of that
property (an exact replica), or one of equal
utility, (a replacement). Objective value
plays a significant role in determining
value by means of the
cost approach.
Five steps make up
the cost approach;
Estimate the
value of the site
Estimate the cost
of reproducing or replacing the existing
improvements
Estimate the
amount of accrued depreciation in the
improvements suffered due to physical
deterioration, functional and economic
obsolescence
Subtract the
total accrued depreciation from the
replacement or reproduction cost to
arrive at the depreciated cost of
improvements
Add the
depreciated cost of improvements to the
estimated value of the site to arrive at
an estimated market value the whole
property
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