In July 2026, Appraiser Elena is valuing a 70-year-old home with several additions, mixed-quality renovations, and no clear market evidence for how buyers react to each older feature. What limitation of the cost approach is most relevant?
Correct Answer
D) It may be less reliable because accrued depreciation is harder to measure accurately
The major challenge in applying the cost approach to older, heavily altered properties is often estimating accrued depreciation accurately. When physical wear, layout issues, and outside influences are hard to isolate and measure, the cost approach can become less reliable.
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More Valuation Market Analysis Questions
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- → An example of functional obsolescence is:
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Previous Question
On a September 2026 appraisal, Appraiser Chloe estimates replacement cost new of a dwelling at $270,000 and of a detached garage at $12,000. The site value is $70,000, and total accrued depreciation is $40,000. What indicated value does the cost approach produce?
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Builder Marcus spends $140,000 on luxury finishes in a subdivision where buyers usually pay only modest premiums for high-end upgrades. Which statement is most accurate from a cost-approach perspective?