Cost Approach

The Cost Approach section includes cost estimates of the land value, cost of constructing dwellings and outbuildings, and the appropriate amount of depreciation. This section provides space for additional commentary and exhibits.

The Cost Approach section displays when CostApproachIndicator (UID: 1000.0027, FID: Not on report) = "true".

Indicated Value by Cost Approach#

The Indicated Value by Cost Approach subsection is a summary of the cost approach. The fields are populated based on data in the subsections that follow. They are not directly entered by the appraiser.

The Indicated Value by Cost Approach subsection displays when the Cost Approach section is included. (Figure 25 - 1)

• Indicated Value by Cost Approach - ValueIndicatedByCostApproachAmount (UID: 1300.0001, FID: 25.000)
  • Displays in the subsection header

Calculated: Depreciated Cost of Dwellings + Depreciated Cost of Outbuildings + As-Is Value of Other Site Improvements + Opinion of Site Value

• Depreciated Cost of Dwellings - DepreciatedCostDwellingsTotalAmount (UID: 1100.0026, FID: 25.001)

  • Total depreciation for all dwellings ▪ Calculated: Sum of ImprovementEstimatedTotalCostAmount (UID: 1100.0053, FID: 25.018) for all dwellings

• Depreciated Cost of Outbuildings - DepreciatedCostOutbuildingsTotalAmount (UID: 1100.0027, FID: 25.002)

  • Total depreciation for all outbuildings ▪ Do not display when there are no outbuildings ▪ Calculated: Sum of ImprovementEstimatedTotalCostAmount (UID: 1100.0084, FID: 25.036) for all outbuildings in the Cost Approach.
  • Deliver even if the value is zero
  • Deliver even if the value is zero

• As Is Value of Site Improvements - SiteOtherImprovementsAsIsAmount (UID: 1100.0032, FID: 25.003)

• Opinion of Site Value - SiteEstimatedValueAmount (UID: 1100.0030, FID: 25.004)

Figure 25 - 1

Depreciated Cost - Dwelling - [Structure Identifier]#

The Depreciated Cost - Dwelling subsection displays when CostApproachIndicator = "true".

Dwelling#

• When Dwellings Containing Units - DwellingCount (UID: 0100.0056, FID: 3.007) = 1
  • The subsection header displays as Depreciated Cost - Dwelling

Structure Identifier#

• When Dwellings Containing Units - DwellingCount (UID: 0100.0056, FID: 3.007) > 1:
  • The subsection header displays as Depreciated Cost - Dwelling - [Structure Identifier] ▪ Structure Identifier - StructureIdentifier (UID: 0300.0101, FID: 25.005) when applicable, re-displays, from Structure Identifier (UID: 0300.0101, FID: 8.000) from the Dwelling Exterior section
  • The dwellings must be linked through an arcrole

Replacement or Reproduction Cost for Each Dwelling#

Information displays for each dwelling (Figure 25 - 2):

• Area Type - ReplacementOrReproductionCostAreaType (UID: 1100.0042, FID: 25.006) - this indicates the area to reproduce or replace. The selection made from the enumerated list will become the row header.
  • Each area indicated displays on a separate row.
  • If multiple areas, display the area with the highest dollar amount first.
• Area Size - ReplacementOrReproductionCostAreaMeasure (UID: 1100.0039, FID: 25.007) is required for each area type and displays in the center column before "@".
  • This value must include the unit of measure (Sq. Ft.) - UnitOfMeasureType.
• Replacement or Reproduction Cost per Unit of Measure - PricePerAreaAmount (UID: 1100.0040, FID: 25.008) is after "@" and indicates the cost per square foot
• Area Type Cost - ReplacementOrReproductionCostAmount (UID: 1100.0041, FID: 25.009) is the total cost for the line item.
  • Calculated: Area Size - ReplacementOrReproductionCostAreaMeasure (UID: 1100.0039, FID: 25.007) multiplied by Replacement or Reproduction Cost per Unit of Measure - PricePerAreaAmount (UID: 1100.0040, FID: 25.008)

Figure 25 - 2

Depreciated Cost - Dwelling#

• The itemized depreciation (6 data points) or the total depreciation is required for each dwelling (Figure 25 - 3):

• Itemized depreciation (percent and dollar amount)

  • Physical Depreciation
    • DepreciationPhysicalAmount (UID: 1100.0050, FID: 25.011)
      • Calculated: DepreciationPhysicalPercent * The sum of all occurrences of ReplacementOrReproductionCostAmount
      • Mutually exclusive with total depreciation. If not 0, display as a negative number and round to the nearest dollar
    • DepreciationPhysicalPercent (UID: 1100.0051, FID: 25.010)
      • Deliver (even if the value is zero) as a positive number in the following format: nn.## (e.g., a value of 25.10 represents 25.10%).
  • Functional Depreciation
    • DepreciationFunctionalAmount (UID: 1100.0048, FID: 25.013)
      • Calculated: DepreciationFunctionalPercent * The sum of all occurrences of ReplacementOrReproductionCostAmount
      • Mutually exclusive with total depreciation. If not 0, display as a negative number and round to the nearest dollar.
    • DepreciationFunctionalPercent (UID: 1100.0049, FID: 25.012)
      • Deliver (even if the value is zero) as a positive number in the following format: nn.## (e.g., a value of 25.10 represents 25.10%).
  • External Depreciation
    • DepreciationExternalAmount (UID: 1100.0046, FID: 25.015)
      • Calculated: DepreciationExternalPercent * The sum of all occurrences of ReplacementOrReproductionCostAmount
      • Mutually exclusive with total depreciation. If not 0, display as a negative number, and round to the nearest dollar.
    • DepreciationExternalPercent (UID: 1100.0047, FID: 25.014)
      • Deliver (even if the value is zero) as a positive number in the following format: nn.## (e.g., a value of 25.10 represents 25.10%).
      • Mutually exclusive with physical depreciation, external depreciation, and functional depreciation. Deliver even if the value is zero. If not 0, display as a negative number, and round to the nearest dollar.
        • This is an aggregate number representing the sum of physical, functional, and external depreciation.
  • When CostApproachIndicator = "true" AND (ConstructionMethodType = "Manufactured" OR OutbuildingType = "ManufacturedHome")
  • Cannot be delivered as zero.
  • Calculated for the dwelling as follows: ((sum of all 'ReplacementOrReproductionCostAmount') + 'ManufacturedHomeInstallationCostAmount' (if applicable) - ((DepreciationPhysicalAmount + DepreciationFunctionalAmount + DepreciationExternalAmount) or DepreciationTotalAmount))

• Total Depreciation - DepreciationTotalAmount (UID: 1100.0045, FID: 25.016)

• Manufactured Home Delivery Installation and Setup - ManufacturedHomeInstallationCostAmount (UID: 1100.0038, FID: 25.017) displays

• Total - Display ImprovementEstimatedTotalCostAmount (UID: 1100.0053, FID: 25.018) when CostApproachIndicator = "true"

Figure 25 - 3

Remaining Economic Life and Effective Age for Dwelling#

Display "years" following the number.

• Remaining Economic Life - EstimatedRemainingEconomicLifeYearsCount (UID: 0300.0041, FID: 25.019) displays
  • When (ImprovementType = "Dwelling" AND CostApproachIndicator = "true")
• Commentary on Remaining Economic Life - EstimatedRemainingEconomicLifeDescription (UID: 0300.0040, FID: 25.021) displays
  • When EstimatedRemainingEconomicLifeYearsCount < 30 OR Exists ▪ If not provided, do not display
• Effective Age displays as a range or a single number. EffectiveAgeYearsCount is mutually exclusive with EffectiveAgeRangeHighYearsCount and EffectiveAgeRangeLowYearsCount.
  • Display the Age Range ▪ EffectiveAgeRangeHighYearsCount (UID: 0300.0037, FID: 25.020) ▪ EffectiveAgeRangeLowYearsCount (UID: 0300.0038, FID: 25.020) ▪ When (ImprovementType = "Dwelling" AND CostApproachIndicator = "true" AND EffectiveAgeYearsCount is not provided)
  • Display the Age ▪ EffectiveAgeYearsCount (UID: 0300.0039, FID: 25.020) ▪ When (ImprovementType = "Dwelling" AND CostApproachIndicator = "true" AND EffectiveAgeRangeHighYearsCount is not provided AND EffectiveAgeRangeLowYearsCount is not provided)
• Commentary on Effective Age - EffectiveAgeDescription (UID: 0300.0036, FID: 25.022) may be provided
  • Display when (ImprovementType = "Dwelling" AND CostApproachIndicator (UID: 1000.0027, FID: Not on report) = "true" AND Exists) OR (ImprovementType = "Dwelling" AND CostApproachIndicator = "false" AND GovernmentAgencyAppraisalIndicator = "true") ▪ If not provided, do not display

Depreciated Cost - Outbuilding - [Outbuilding Type]#

The Depreciated Cost - Outbuilding subsection displays when CostApproachIndicator = "true" AND ImprovementType = "Outbuilding" AND OutbuildingRealPropertyIndicator (UID: 0300.0024, FID: 12.002) = "true".

Outbuilding Type#

• Outbuilding Type - OutbuildingType (UID: 0300.0025, FID: 25.023) displays in the subsection header.
  • The table repeats for each outbuilding.
  • Outbuilding Type is defined, when applicable, in the Outbuilding section.
  • The outbuilding must be linked through an arcrole.

Replacement or Reproduction Cost for Each Outbuilding#

Information displays for each outbuilding:

• Area Type - ReplacementOrReproductionCostAreaType (UID: 1100.0060, FID: 25.024) - this indicates the area to reproduce or replace. The selection made from the enumerated list will become the row header.

  • Each area indicated displays on a separate row.
  • If multiple areas, display the area with the highest dollar amount first.

• Area Size - ReplacementOrReproductionCostAreaMeasure (UID: 1100.0057, FID: 25.025) is required for each area type and displays in the center column before "@".

  • This value must include the unit of measure (Sq. Ft.) - UnitOfMeasureType

• Replacement or Reproduction Cost per Unit of Measure - PricePerAreaAmount (UID: 1100.0058, FID: 25.026) is after "@" and indicates the cost per square foot.

• Area Type Cost - ReplacementOrReproductionCostAmount (UID: 1100.0059, FID: 25.027) is the total cost for the line item.

  • Calculated: Area Size - ReplacementOrReproductionCostAreaMeasure (UID: 1100.0057, FID: 25.025) multiplied by Replacement or Reproduction Cost per Unit of Measure - PricePerAreaAmount (UID: 1100.0058, FID: 25.026)

Depreciated Cost - Outbuilding#

• The itemized depreciation (6 data points) or the total depreciation is required for each dwelling:

  • Itemized depreciation (percent and dollar amount)
  • Physical Depreciation
    • DepreciationPhysicalAmount (UID: 1100.0089, FID: 25.029)
      • Calculated: DepreciationPhysicalPercent * The sum of all occurrences of ReplacementOrReproductionCostAmount
      • Mutually exclusive with total depreciation. If not 0, display as a negative number and round to the nearest dollar.
    • DepreciationPhysicalPercent (UID: 1100.0090, FID: 25.028)
      • Deliver (even if the value is zero) as a positive number in the following format: nn.## (e.g., a value of 25.10 represents 25.10%).
  • Functional Depreciation
    • DepreciationFunctionalAmount (UID: 1100.0087, FID: 25.031)
      • Calculated: DepreciationFunctionalPercent * The sum of all occurrences of ReplacementOrReproductionCostAmount
      • Mutually exclusive with total depreciation. If not 0, display as a negative number and round to the nearest dollar.
    • DepreciationFunctionalPercent (UID: 1100.0088, FID: 25.030)
      • Deliver (even if the value is zero) as a positive number in the following format: nn.## (e.g., a value of 25.10 represents 25.10%).
  • External Depreciation
    • DepreciationExternalAmount (UID: 1100.0085, FID: 25.033)
      • Calculated: DepreciationExternalPercent * The sum of all occurrences of ReplacementOrReproductionCostAmount
      • Mutually exclusive with total depreciation. If not 0, display as a negative number and round to the nearest dollar.
    • DepreciationExternalPercent (UID: 1100.0086, FID: 25.032)
      • Deliver (even if the value is zero) as a positive number in the following format: nn.## (e.g., a value of 25.10 represents 25.10%).
  • Total Depreciation - DepreciationTotalAmount (UID: 1100.0091, FID: 25.034) dollar amount
    • Mutually exclusive with physical depreciation, external depreciation, and functional depreciation. Deliver even if the value is zero. If not 0, display as a negative number, and round to the nearest dollar.
      • This is an aggregate number representing the sum of physical, functional, and external depreciation.

• Manufactured Home Delivery Installation and Setup - ManufacturedHomeInstallationCostAmount (UID: 1100.0083, FID: 25.035) displays when

• CostApproachIndicator = "true" AND ConstructionMethodType = "Manufactured"

  • Cannot be delivered as 0.

• Total - Display ImprovementEstimatedTotalCostAmount (UID: 1100.0084, FID: 25.036) when CostApproachIndicator = "true" AND ImprovementType = "Outbuilding".

  • Calculated for the outbuilding as follows: ((sum of all 'ReplacementOrReproductionCostAmount') + 'ManufacturedHomeInstallationCostAmount' (if applicable) - ((DepreciationPhysicalAmount + DepreciationFunctionalAmount + DepreciationExternalAmount) or DepreciationTotalAmount))

As-Is Value of Site Improvements#

The As-Is Value of Site Improvements subsection displays when Amount - SiteImprovementAsIsCostAmount (UID: 1100.0035, FID: 25.038) is not null.

• Site Improvements can be itemized as individual amounts and descriptions or provided as an aggregate amount and description.
• Description - SiteImprovementDescription (UID: 1100.0036, FID: 25.037) must be provided for each Amount - SiteImprovementAsIsCostAmount (UID: 1100.0035, FID: 25.038). (Figure 25 - 4)
  • When sent individually each instance of amount and description will appear on separate lines in the table.
  • Cannot be delivered as zero.
• Total - SiteOtherImprovementsAsIsAmount (UID: 1100.0032, FID: 25.003, 25.039)
  • Calculated: The sum of all SiteImprovementAsIsCostAmount (UID: 1100.0035, FID: 25.038)
  • Cannot be delivered as zero.

Figure 25 - 4

Site Value#

The Site Value subsection displays when CostApproachIndicator (UID: 1000.0027, FID: Not on report) = "true". When this subsection displays, Opinion of Site Value - SiteEstimatedValueAmount (UID: 1100.0030, FID: 25.004, 25.041) and Primary Site Valuation Method - SiteValuationMethodType (UID: 1100.0033, FID: 25.040) are required.

Opinion of Site Value - SiteEstimatedValueAmount (UID: 1100.0030, FID: 25.004, 25.041) displays even if the value is zero.

When Primary Site Valuation Method - SiteValuationMethodType (UID: 1100.0033, FID: 25.040) = "SalesComparison" AND @ValuationUseType = "LandComparable" then the following displays for each comparable (Figure 25 - 5):

• Address or APN must be provided. If both are provided, both should be delivered in the data and displayed on the report.
• When Assessor Parcel Number (APN) - ParcelIdentifier (UID: 1100.0017, FID: 25.046) is null, Address is required. ▪ # - PropertyOrdinalNumber (UID: 1100.0015, FID: 25.042) ▪ Address - AddressLineText (UID: 1100.0005, FID: 25.043) ▪ Address - CityName (UID: 1100.0007, FID: 25.043) ▪ Address - PostalCode (UID: 1100.0009, FID: 25.043) ▪ Address - StateCode (UID: 1100.0010, FID: 25.043) ▪ County - CountyName (UID: 1100.0008, FID: 25.044)
• When Address - AddressLineText (UID: 1100.0005, FID: 25.043) is null, Assessor Parcel Number (APN) is required. ▪ If ParcelIdentificationType (UID: 1100.0016, FID: 25.046) = "AssessorUnformattedIdentifier", provide Assessor Parcel Number (APN) - ParcelIdentifier (UID: 1100.0017, FID: 25.046)
• Data Source - Add type data point DataSourceIdentifier (UID: 1800.0347, FID: 25.045)
• Display Data Source
• When an Identifier is provided, display after the data source. (E.g., MLS 1234567)
• If there are multiple data sources, separate each with "|". (E.g., MLS 1234567 | Assessor Record)
• Site Size - LotSizeAreaMeasure (UID: 1100.0020, FID: 25.047)
  • Follow display rules for LotSizeAreaMeasure (UID: 1500.0093, FID: 4.000)
• Sale Date - OwnershipTransferDate (UID: 1100.0018, FID: 25.048)
• Price - OwnershipTransferTransactionAmount (UID: 1100.0019, FID: 25.049)

Reconciliation of Site Value - SiteEstimatedValueCommentDescription (UID: 1100.0031, FID: 25.050) is required when CostApproachIndicator (UID: 1000.0027, FID: Not on report) = "true" OR SiteValueIndicator (UID: 1000.0033, FID: Not on report) = "true".

Figure 25 - 5

General Description#

The General Description subsection always displays.

Cost Approach: General Description

Figure 25 - 6

Cost Approach Commentary#

The Cost Approach Commentary subsection always displays when the Cost Approach section is included. Comments must use CostAnalysisCommentDescription (UID: 1100.0023, FID: 25.057).

Cost Approach Exhibits#

The Cost Approach Exhibits subsection displays only when images are provided. All text must display above the image in bold font.

Map of Land Comparable#

A map showing the subject property and land comparables may be provided and is delivered in the instance of PROPERTY where @ValuationUseType (UID: 0100.0043, FID: Not on report) = "SubjectProperty".

• When provided, the map must be delivered using ImageCategoryType (UID: 1400.0638, FID: 25.59.1) = "LandComparableMap" and displays with the caption "Map of Land Comparables".

Additional Exhibits#

• Any additional images included must be delivered using ImageCategoryType (UID: 1400.0638, FID: 25.058.1) = "CostApproachExhibit".
• An image caption should be included using ImageCaptionCommentDescription (UID: 1400.0640, FID: 25.058.2).

Cost Approach - Arcrole Relationships#

Arcrole relationships, establishes "relationships" or linkages in the XML data file that may be visually obvious on the URAR Report. In the XML data, specific instances of data points or containers must be connected to properly represent the information.

• Containers or datapoints to be linked are identified using "xlink:label."
• The RELATIONSHIP container holds the xlink:arcrole, xlink:from, and xlink:to attributes that describe the data relationships.

There are three arcrole relationships supported in the Cost Approach section.

• IMPROVEMENT_COST_AND_DEPRECIATED_VALUE to IMPROVEMENT
• DATA_SOURCE to PROPERTY
• DATA_SOURCE to COST_APPROACH

IMPROVEMENT_COST_AND_DEPRECIATED_VALUE to IMPROVEMENT#

When the subject property has an improvement included in the cost approach, the IMPROVEMENT_COST_AND_DEPRECIATED_VALUE container should be linked to the subject instance of the IMPROVEMENT container to which the replacement/reproduction costs apply.

The cost and depreciated value of an improvement must be linked to the relevant improvement. The XML below illustrates 3 instances of this relationship.

Land Comparables to Data Source#

Replacement or Reproduction Cost Data Source to cost approach#

Refer to the section Arcrole/Data Relationships in the MISMO XML Version 3.6 chapter for additional information.