Cost approach – key terms

Question 1

A method of appraisal based on the cost of an improvement, minus I need appreciation, + value. Often used when comparable sales cannot be found, as with unique properties or public buildings, or for custom homes or new construction.

Answer 1

Cost approach – also called summation approach

Question 2

The decrease in value to real property improvements caused by deterioration or obsolescence

Answer 2

Depreciation

Question 3

The method of determining the value of an improvement under the cost approach in an appraisal by building a structure using current materials and methods of construction

Answer 3

Replacement cost

Question 4

The method of determining the value of an improvement under the cost approach in an appraisal by building an exact replica of the structure using authentic materials

Answer 4

Reproduction cost

Question 5

The measurement in feet of the above grade interior area of a structure that is livable with proper access, heating and in most cases cooling

Answer 5

Square-foot living space

Question 6

The measurement in feet of an area directly under some type of covering; generally referring to support beams of a structure and all of the area which it covers

Answer 6

Square footage under roof