Appraisers favor this approach specifically for unique or special-purpose properties with no good rental-income or comparable-sales basis — valuing the property as land plus what it would cost to rebuild the improvements today.
How it works
Adding land value to the replacement cost of rebuilding the improvements new, then subtracting accrued depreciation (physical wear, functional obsolescence, external factors), gives the indicated value.
What this does not include
This does not include the detailed breakdown of accrued depreciation into its physical, functional, and external components — this calculator takes total accrued depreciation as a single combined input rather than separately estimating each cause.
How to use this calculator
- Enter land value, replacement cost new, and accrued depreciation.
Frequently asked questions
Why is the cost approach favored for special-purpose properties?
Properties like schools, churches, or unique custom-built structures rarely have good comparable sales or rental-income data, since there’s little to no active market of similar properties trading or leasing.
What’s the difference between “reproduction cost” and “replacement cost”?
Reproduction cost estimates rebuilding an exact replica using the same materials and design; replacement cost instead estimates building a modern equivalent with similar utility — replacement cost is more commonly used in practice.
Does the cost approach work well for older properties?
Less reliably — accrued depreciation becomes harder to estimate accurately as a property ages, which is part of why the cost approach is generally considered most reliable for newer construction.
