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Valuation & Appraisal

Cost Approach

Valuation method based on replacement cost minus depreciation. Useful for special-purpose properties without direct comparables.

Full Definition

The cost approach estimates value as Land Value + (Replacement Cost of Improvements - Accumulated Depreciation). Most useful for new construction or special-purpose properties where direct comparables don't exist.

Related Terms

Income Approach (to Valuation)

Valuation method based on applying a cap rate to NOI. The primary approach for income-producing commercial real estate.

Sales Comparison Approach

Valuation method based on recent sales of comparable properties. Used alongside the income approach.

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