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Cost Approach Appraisal

By Tara Mastroeni – Updated Oct 22, 2024 at 2:24PM

Key Points

  • The cost approach in real estate calculates property value as Land Value + (Cost New - Depreciation).
  • For new or unique properties, the cost approach provides a clear valuation by estimating reproduction or replacement costs.
  • Recognizing depreciation—physical, functional, external—is crucial in adjusting the property’s overall value via the cost approach.
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