Is the cost approach to value accurate, does the building cost for contruction stay still long enough?

Answer 1

If you can precisely acquire cost data- for GLA - garage area- depreciation- and amenties~ and if you have sufficient sales to determine vacant lot value~ without abstraction!

Answer 2

Depends on the area, but in my area the Cost Approach is almost always less than the Sales Comparison Approach and Income approach. This is mainly because the Cost Approach (in an appraisal using the Marshal & Swift Guide which most appraisers use) does not factor in builder profit, carrying costs, and real estate agent commissions. The guide is published once a year, and has a regional multiplier to compensate for higher/lower cost markets. So with the fluctuations in building costs it can never be completely accurate.

On my appraisals I perform the cost approach, but also comment that it is "Deemed unreliable in this market and is not given any weight in the final valuation."

Answer 3

The cost approach is mainly used for new construction or property that is a unique (church etc.) Costs will vary from region to region. The approach is used by establishing a value for the land plus the depreciated value of the improvements. As mentioned earlier it is used for new and special used properties. If the appraisal is used for these kind of properties then it will give give a reliable valuable. If for a 100yr home then it will produce a lower value due to the amount of depreciation of the structure and will be basically land value thus not reliable.

Answer 4

It's fluctuate according to the inputs-labor cost and other utility affects the value.Construction cost will go up!