Cost Approach
An appraisal method that adds land value to the depreciated cost to replace the improvements. It fits new or special-purpose buildings.
The cost approach estimates value by figuring the current cost to build the improvements, subtracting accrued depreciation, and adding the value of the land. The formula is land value plus replacement cost minus depreciation.
It is most reliable for new, unique, or special-purpose buildings such as churches, schools, and government buildings, where comparable sales and income data are limited.
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- Sales Comparison Approach
An appraisal method that estimates value by comparing the subject to recent sales of similar properties and adjusting the comparables toward the subject.
- Income Approach
An appraisal method that estimates value by dividing a property's net operating income by the capitalization rate.
- Depreciation (Appraisal)
In appraisal, a loss in value from physical deterioration, functional obsolescence, or external obsolescence.
This definition is Florida real estate exam-prep education, not legal, tax, or professional advice. Verify current rules against the official source before relying on them for a real transaction. Back to the full glossary.