During an August 2026 buyer consultation, Rafael asks how land is handled when an appraiser uses the cost approach for a residential property. How is site value generally treated?
Correct Answer
C) Estimated separately and then added to the depreciated value of the improvements
In the cost approach, the site or land value is generally estimated separately from the improvements. After the appraiser estimates cost new and deducts accrued depreciation from the improvements, the site value is added to reach the indicated property value.
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Previous Question
On a July 2026 assignment, Appraiser Omar estimates a property's replacement cost new at $450,000. He estimates accrued depreciation at 18% of the improvements, and the site value is $110,000. What is the indicated value by the cost approach?
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In a 2026 appraisal assignment, a home in a modest subdivision has an elaborate indoor basketball court that cost far more to build than buyers in that market are willing to pay for it. In the cost approach, this is most likely treated as what?