Section 25
Cost Approach
Appendix F-1, page 314
The Cost Approach section includes cost estimates by the appraiser of:
- The value of the land
- The cost of constructing dwellings and outbuildings (reproduction or replacement)
- The appropriate amount of depreciation
This section provides space for additional commentary and exhibits.
This section displays when Cost Approach Developed by Appraiser is Yes. The "When to Include" column in this chapter references appraisals for which Cost Approach Developed by Appraiser is Yes.
Cost Approach Developed by Appraiser
| Report Field ID | Report Label | When to Include | Allowable Answers / Format | Definition / Additional Guidance |
|---|---|---|---|---|
| Not on Report | This is an appraiser input that does not display | Always required | Yes | No | Cost Approach Developed by Appraiser - Yes (The Cost Approach section is included) - No (The Cost Approach section is not included) |
Indicated Value by Cost Approach#
Information displaying at the top of the Cost Approach section is calculated or redisplayed from the subsections below.
Cost Approach: Indicated Value by Cost Approach
| Report Field ID | Report Label | When to Include | Allowable Answers / Format | Definition / Additional Guidance |
|---|---|---|---|---|
| 25.000 | Indicated Value by Cost Approach | Always displays | Dollar amount | Calculated: The sum of the following: - Depreciated Cost of Dwellings 25.001 - Depreciated Cost of Outbuildings 25.002 if applicable - As Is Value of Site Improvements 25.003 - Opinion of Site Value 25.004 |
| 25.001 | Depreciated Cost of Dwellings | Always displays | Dollar amount | Calculated: The sum of Estimated Dwelling Cost including depreciation 25.018, for all dwellings on the property. Note: - Reference the Depreciated Cost - Dwelling subsection for each dwelling. |
| 25.002 | Depreciated Cost of Outbuildings | Displays when there are outbuilding(s) that are considered real property | Dollar amount | Calculated: The sum of Estimated Outbuilding Cost including depreciation 25.036, for all outbuildings that are considered real property (all outbuildings in the Cost Approach). Notes: - Reference the Depreciated Cost - Outbuilding subsection for each outbuilding that is considered real property. - If there are no outbuildings in the Cost Approach, Depreciated Cost of Outbuildings does not display. |
| 25.003 | As Is Value of Site Improvements | Always displays | Dollar amount | Total As Is Value of Site Improvements: The total value contributed by other "as is" improvements located on the subject property. Can be 0, such as when Property Rights Appraised is Leasehold. Redisplays from the As Is Value of Site Improvements subsection 25.039. |
| 25.004 | Opinion of Site Value | Always displays | Dollar amount | The dollar value estimated for the property site (e.g., land that is improved so that it is ready to be used for a specific purpose). Can be 0, such as when Property Rights Appraised is Leasehold. Redisplays from the Site Value subsection 25.041. |
Depreciated Cost - Dwelling#
The Depreciated Cost - Dwelling table repeats for each dwelling.
Information that May Display in Gray Bar#
The Depreciated Cost - Dwelling gray bar provides context about the dwelling.
Examples:
- A single-family property would display "Depreciated Cost - Dwelling"
- A 2- to 4-unit property with multiple dwellings might display "Depreciated Cost - Dwelling - Building 2", depending on appraiser inputs
- Structure Identifier is Building 2
Cost Approach - Depreciated Cost of Dwelling
| Report Field ID | Report Label | When to Include | Allowable Answers / Format | Definition / Additional Guidance |
|---|---|---|---|---|
| 25.005 | Depreciated Cost - Dwelling (gray bar) | Display only | N/A | If applicable, Structure Identifier (8.000) redisplays from the Dwelling Exterior section. |
Replacement or Reproduction Cost for each Dwelling#
Cost Approach - Replacement or Reproduction Cost (Dwelling)
| Report Field ID | Report Label | When to Include | Allowable Answers / Format | Definition / Additional Guidance |
|---|---|---|---|---|
| 25.006 | N/A | Required for each dwelling | Choose one or more allowable answers from the Definition / Additional Guidance column | Area Type: The area for which costs to reproduce or replace are being estimated. - Above Grade Finished Area - Above Grade Finished Area (Nonstandard) - Above Grade Unfinished Area - Attached Garage - Below Grade Finished Area - Below Grade Finished Area (Nonstandard) - Below Grade Unfinished Area - Built-in Garage - Carport - Foundation - Other (Describe) Note: Each selected answer displays in a separate row. |
| 25.007 | N/A | Required for each indicated Area Type | Number of square feet | Area Size |
| 25.008 | @ | Required for each indicated Area Type | Dollar amount | Replacement or Reproduction Cost per Unit of Measure (e.g., cost per square foot). |
| 25.008 | N/A | Required for each indicated Area Type | Dollar amount | Area Type Cost: The total cost for the line item. Calculated: Area Size x Replacement or Reproduction Cost per Unit of Measure, rounded to the nearest dollar. |
Depreciation For Each Dwelling#
One of the following may be provided for each dwelling:
- Separate physical, functional and external depreciation (percent and dollar amount), or
- Total depreciation (dollar amount). This is an aggregate number representing physical, functional, and external depreciation.
Cost Approach - Depreciation (Dwelling)
| Report Field ID | Report Label | When to Include | Allowable Answers / Format | Definition / Additional Guidance |
|---|---|---|---|---|
| 25.010 | Physical Depreciation | Required if Total Depreciation is not provided | Percent | Dwelling Physical Depreciation Percent - Can be 0. |
| 25.011 | Physical Depreciation | Required if Total Depreciation is not provided | Dollar amount | Dwelling Physical Depreciation Amount Calculated: Dwelling Physical Depreciation Percent x sum of all the Area Type Costs for the dwelling, rounded to the nearest dollar. |
| 25.012 | Functional Depreciation | Required if Total Depreciation is not provided | Percent | Dwelling Functional Depreciation Percent - Can be 0. |
| 25.013 | Functional Depreciation | Required if Total Depreciation is not provided | Dollar amount | Dwelling Functional Depreciation Amount Calculated: Dwelling Functional Depreciation Percent x sum of all the Area Type Costs for the dwelling, rounded to the nearest dollar. |
| 25.014 | External Depreciation | Required if Total Depreciation is not provided | Percent | Dwelling External Depreciation Percent - Can be 0. |
| 25.015 | External Depreciation | Required if Total Depreciation is not provided | Dollar amount | Dwelling External Depreciation Amount Calculated: Dwelling External Depreciation Percent x sum of all the Area Type Costs for the dwelling, rounded to the nearest dollar. |
| 25.016 | Total Depreciation | Required if Physical, Functional and External Depreciation are not provided | Dollar amount | Total Depreciation for Dwelling: The lump sum accumulated monetary loss in value for the reproduction or replacement cost of the dwelling from all causes of depreciation. Can be 0. |
Manufactured Home Delivery, Installation and Setup for the Dwelling#
Cost Approach - Manufactured Home Delivery, Installation and Setup (Dwelling)
| Report Field ID | Report Label | When to Include | Allowable Answers / Format | Definition / Additional Guidance |
|---|---|---|---|---|
| 25.017 | Manufactured Home Delivery, Installation, and Setup | Required if Construction Method is Manufactured | Dollar amount | The total amount associated with the delivery, installation, and setup costs for a manufactured home. If the specific amount is unavailable from the invoice, provide a reasonable estimate, and explain in Cost Approach Commentary. |
Estimated Dwelling Cost (Total)#
Cost Approach - Total Depreciated Cost (Dwelling)
| Report Field ID | Report Label | When to Include | Allowable Answers / Format | Definition / Additional Guidance |
|---|---|---|---|---|
| 25.018 | Total | Required for each dwelling | Dollar amount | Estimated Dwelling Cost: The estimated cost of the dwelling, including all costs to replace or reproduce the dwelling, the applicable depreciation, and any applicable delivery, installation, and setup fee. Calculated for the dwelling: - Add the following: - Area Type Costs(s) 25.009 - Manufactured Home Delivery, Installation, and Setup 25.017 if applicable - Subtract depreciation: - Dwelling Physical Depreciation Amount 25.011 - Dwelling Functional Depreciation Amount 25.013 - Dwelling External Depreciation Amount 25.015 - Total Depreciation for Dwelling 25.016 OR |
Remaining Economic Life and Effective Age#
Cost Approach: Remaining Economic Life and Effective Age
| Report Field ID | Report Label | When to Include | Allowable Answers / Format | Definition / Additional Guidance |
|---|---|---|---|---|
| 25.019 | Remaining Economic Life | Required for each dwelling | Number of years | The estimated number of years of the structure's remaining economic life. |
| 25.020 | Effective Age | Required for each dwelling | Number of years or range of years | The estimated age of a structure based on its utility and physical wear and tear. |
| 25.021 | Commentary on Remaining Economic Life | Required for each dwelling if Remaining Economic Life is less than 30 years, or if relevant | Free-form | Commentary could include information pertinent to Remaining Economic Life that is not captured in the discrete data, or additional details to support the discrete data that is provided. |
| 25.022 | Commentary on Effective Age | Required for each dwelling for FHA, VA, and USDA appraisals, or if relevant | Free-form | Commentary could include information pertinent to Effective Age that is not captured in the discrete data, or additional details to support the discrete data that is provided. |
Depreciated Cost - Outbuilding#
The Depreciated Cost - Outbuilding table repeats for each outbuilding when Considered Real Property (12.002) is Yes, and the "When to Include" column in this subchapter reflects this. If there are no outbuildings that are real property, this subsection does not display.
Outbuilding Type (Displays in Gray Bar)#
Cost Approach: Outbuilding Type
| Report Field ID | Report Label | When to Include | Allowable Answers / Format | Definition / Additional Guidance |
|---|---|---|---|---|
| 25.023 | N/A | Displays for each outbuilding | Choose an allowable answer from 10.000 | Outbuilding Type redisplays from the Outbuilding section 10.000. Note: Detached garages with no other uses (ADUs or additional areas) are not reported as outbuildings in the URAR. See As is Value of Site Improvements (25.037) for how to address in the Cost Approach section. |
Replacement or Reproduction Cost for each Outbuilding#
Cost Approach - Replacement or Reproduction Cost (Outbuilding)
| Report Field ID | Report Label | When to Include | Allowable Answers / Format | Definition / Additional Guidance |
|---|---|---|---|---|
| 25.024 | N/A | Required for each outbuilding | Choose one or more allowable answers from the Definition / Additional Guidance column | Area Type: The area for which costs to reproduce or replace are being estimated. - Finished Area - Foundation - Garage - Unfinished Area - Other (Describe) Note: Each selected answer displays in a separate row. |
| 25.025 | N/A | Required for each indicated Area Type | Number of square feet | Area Size |
| 25.026 | @ | Required for each indicated Area Type | Dollar amount | Replacement or Reproduction Cost per Unit of Measure (e.g., cost per square foot). |
| 25.027 | N/A | Required for each indicated Area Type | Dollar amount | Area Type Cost: The total cost for the line item. Calculated (Area Size x Replacement or Reproduction Cost per Unit of Measure), rounded to the nearest dollar. |
Depreciation for Each Outbuilding#
One of the following may be provided for each outbuilding that is considered real property:
- Separate physical, functional and external depreciation (percent and dollar amount), or
- Total depreciation (dollar amount). This is an aggregate number representing physical, functional, and external depreciation.
See example in Depreciation For Each Dwelling.
Cost Approach - Depreciation (Outbuilding)
| Report Field ID | Report Label | When to Include | Allowable Answers / Format | Definition / Additional Guidance |
|---|---|---|---|---|
| 25.028 | Physical Depreciation | Required if Total Depreciation is not provided | Percent | Outbuilding Physical Depreciation Percent |
| 25.029 | Physical Depreciation | Required if Total Depreciation is not provided | Dollar amount | Outbuilding Physical Depreciation Amount Calculated: Outbuilding Physical Depreciation Percent x Sum of all the Area Type Costs for the outbuilding, rounded to the nearest dollar. |
| 25.030 | Functional Depreciation | Required if Total Depreciation is not provided | Percent | Outbuilding Functional Depreciation Percent |
| 25.031 | Functional Depreciation | Required if Total Depreciation is not provided | Dollar amount | Outbuilding Functional Depreciation Amount Calculated: Outbuilding Functional Depreciation Percent x sum of all the Area Type Costs for the outbuilding, rounded to the nearest dollar. |
| 25.032 | External Depreciation | Required if Total Depreciation is not provided | Percent | Outbuilding External Depreciation Percent |
| 25.033 | External Depreciation | Required if Total Depreciation is not provided | Dollar amount | Outbuilding External Depreciation Amount Calculated: Outbuilding External Depreciation Percent x sum of all the Area Type Costs for the outbuilding, rounded to the nearest dollar. |
| 25.034 | Total Depreciation | Required if Physical, Functional and External Depreciation are not provided | Dollar amount | Total Depreciation for Outbuilding: The lump sum accumulated monetary loss in value for the reproduction or replacement cost of the outbuilding from all causes of depreciation. |
Manufactured Home Delivery, Installation and Setup for the Outbuilding#
Cost Approach - Manufactured Home Delivery, Installation and Setup (Outbuilding)
| Report Field ID | Report Label | When to Include | Allowable Answers / Format | Definition / Additional Guidance |
|---|---|---|---|---|
| 25.035 | Manufactured Home Delivery, Installation, and Setup | Required if Outbuilding Type is Manufactured Home | Dollar amount | The total amount associated with the delivery, installation and setup costs for a manufactured home. If the specific amount is unavailable from the invoice, provide a reasonable estimate, and explain in Cost Approach Commentary. |
Estimated Outbuilding Cost (Total)#
Cost Approach - Total Depreciated Cost (Outbuilding)
| Report Field ID | Report Label | When to Include | Allowable Answers / Format | Definition / Additional Guidance |
|---|---|---|---|---|
| 25.036 | Total | Required for each outbuilding | Dollar amount | Estimated Outbuilding Cost: The estimated cost of the outbuilding, including all costs to replace or reproduce the dwelling, the applicable depreciation, and any applicable delivery, installation, and setup fee. Calculated for the outbuilding: - Add the following: - Area Type Costs(s) 25.027 - Manufactured Home Delivery, Installation, and Setup 25.035 if applicable - Subtract depreciation: - Outbuilding Physical Depreciation Amount 25.029 - Outbuilding Functional Depreciation Amount 25.031 - Outbuilding External Depreciation Amount 25.033 - Total Depreciation for Outbuilding 25.034 OR |
As is Value of Site Improvements#
Site improvements may be provided individually or in aggregate.
Note: For detached garages with no additional separate area which are reported in Vehicle Storage and not in Outbuilding, report the depreciated cost of the garage here. Example:
Cost Approach: As Is Value of Site Improvements
| Report Field ID | Report Label | When to Include | Allowable Answers / Format | Definition / Additional Guidance |
|---|---|---|---|---|
| 25.037 | Description | Always required for each site improvement | Free-form | Site Improvement Description: A description of the improvement for which the As Is value is provided. Example: - Well, septic, fence, driveway and water frontage improvements could be displayed in aggregate on a single row, or on separate rows. |
| 25.038 | Amount | Always required for each site improvement | Dollar amount | As Is Value of Site Improvement Amount: The As Is amount of the site improvement as of the appraisal effective date. Provide individual costs if documented separately, or as a lump sum for aggregated site improvements. |
| 25.039 | Total | Always required | Dollar amount | Total As Is Value of Site Improvements: The total value contributed by other As Is improvements located on the subject property. Calculated: The sum of all the As Is Value of Site Improvement Amounts 25.038 Note: This amount redisplays at the top of the Cost Approach section 25.003. |
Site Value#
Site Valuation Method And Site Value#
Site Value and Site Valuation Method
| Report Field ID | Report Label | When to Include | Allowable Answers / Format | Definition / Additional Guidance |
|---|---|---|---|---|
| 25.040 | Primary Site Valuation Method | Always required | Choose an allowable answer from table (Primary Site Valuation Method) | The method by which the site value is calculated. - Allocation - Extraction - Sales Comparison - Other (Describe) |
| 25.041 | Opinion of Site Value | Always required | Dollar amount | The dollar value estimated for the property site (e.g., land that is improved so that it is ready to be used for a specific purpose). Can be 0, such as when Property Rights Appraised 3.019 is Leasehold. Note: This amount redisplays at the top of the Cost Approach section 25.004. |
Primary Site Valuation Method (Choose one)
| Allowable Answer | Definition / Additional Guidance |
|---|---|
| Allocation | An estimation of land value in which sales of improved properties are analyzed to establish a typical ratio of land value to total property value. This ratio is applied to the property being appraised to arrive at an estimated value for the land. |
| Extraction | An estimation of land value in which the depreciated cost of the improvements on the improved property is estimated and deducted from the total sale price to arrive at an estimated value for the land. |
| Sales Comparison | Identifies sales of vacant land and / or sites and applies an adjustment process to the sale price to determine an indicated value or range of value for the subject site. Note: If this answer is selected, land comparables (25.042-25.049) must be provided. |
| Other (Describe) | Select Other to enter an answer that is not in the above list. |
Information for each Land Comparable#
The Land Comparables table displays if Primary Site Valuation Method is Sales Comparison, and the "When to Include" column in this table reflects this.
Cost Approach - Land Comparables
| Report Field ID | Report Label | When to Include | Allowable Answers / Format | Definition / Additional Guidance |
|---|---|---|---|---|
| 25.042 | # | Required for each land comparable | 1, 2, 3 … | Land Comparable # |
| 25.043 | Address | If available for each land comparable | Free-form | Land Comparable Street Address If the street address is unavailable or has not yet been assigned, provide any information necessary to identify the property. |
| 25.043 | Address | Required for each land comparable | Free-form | Land Comparable City, State, ZIP Code |
| 25.044 | County | Required for each land comparable | Free-form | Name of the county or parish as defined by the state. Note: If the land comparable is not located in any county (e.g., located in an independent city), enter the name of the local municipality or district in which the property is located. |
| 25.045 | Data Source | Required for each land comparable | Choose one or more allowable answers from the Definition / Additional Guidance column | Land Comparable Data Source - Assessor Record - Builder or Developer - Data Aggregator - Exterior Inspection - HOA - Land Survey - Lender - MLS - Previous Appraisal File - Property Owner - Real Estate Agent - Zoning - Other (Describe) |
| 25.045 | Data Source | Required when Land Comparable Data Source is MLS, or if applicable for other data sources | Free-form | Data Source Identifier: A unique number or identifier assigned to the land comparable by the data source. Notes: - If Land Comparable Data Source is MLS, the MLS number is required. - If a data source has an identifier, it must be reported on the URAR. |
| 25.046 | Assessor Parcel Number (APN) | If available for each land comparable | Free-form | A number assigned to parcels of real property by the tax assessor of a particular jurisdiction for purposes of identification and record-keeping. |
| 25.047 | Site Size | Required for each land comparable | Number of acres, square feet, hectares, or square meters | The total area of the site, including all parcels. - For area less than 1 acre, use square feet in whole numbers (e.g., 27,840 sq. ft.) - For area that is 1 acre or more, use acres to 2 decimals (e.g., 1.25 acres). - If using the metric system, for area less than 1 hectare, use square meters in whole numbers (e.g., 7,500 sq. m.) - If using the metric system, for area that is 1 hectare or more, use hectares to 2 decimals (e.g., 1.25 hectares). |
| 25.048 | Sale Date | Required for each land comparable | mm/dd/yyyy | |
| 25.049 | Price | Required for each land comparable | Dollar amount |
Reconciliation of Site Value#
Cost Approach - Reconciliation of Site Value
| Report Field ID | Report Label | When to Include | Allowable Answers / Format | Definition / Additional Guidance |
|---|---|---|---|---|
| 25.050 | Reconciliation of Site Value | Always required | Free-form | Commentary should include information pertinent to the Opinion of Site Value that is not captured in the discrete data, or additional details to support the discrete data that is provided, including access, utilities, zoning, views, or site influences of the land comparables in relation to the subject. |
| See iGuide | N/A | If relevant | Image | Map of Land Comparables A map of the subject and land comparables should be included, which displays in Cost Approach Exhibits with the caption "Map of Land Comparables". An additional caption may be provided to further identify the image. Reference published guidelines by the GSEs, government agencies, or other identified secondary market participants for specific guidance. |
General Description#
Cost Approach - General Description
| Report Field ID | Report Label | When to Include | Allowable Answers / Format | Definition / Additional Guidance |
|---|---|---|---|---|
| 25.051 | Cost Type | Always required | Choose an allowable answer from the Definition / Additional Guidance column | The method by which all buildings in the Cost Approach section would be reconstructed. - Replacement - Reproduction |
| 25.052 | Cost Data Source | Always required | Choose an allowable answer from the Definition / Additional Guidance column | Cost Data Source: The primary source that the appraiser cited for cost data in the Cost Approach section. - Builder or Developer - Cost Service (Displays Cost Service Provider instead) - Cost Survey - Other (Describe) Note: An image of the worksheet showing support of Cost Approach calculations may be provided, which displays in Cost Approach Exhibits. A caption may be provided to further describe the image. |
| 25.052 | Cost Data Source | Required if Cost Data Source is Cost Service | Choose an allowable answer from the Definition / Additional Guidance column | Cost Service Provider - Craftsman Cost Guide - Marshall & Swift - NADA - RSMeans - Xactimate Note: Allowable answers may be provided that are not in the above list. |
| 25.053 | Quality Rating | Required if Cost Data Source is Cost Service | Choose an allowable answer from the Definition / Additional Guidance column | Cost Service Quality Rating - Excellent - Very Good - Good - Average - Fair - Low Note: Allowable answers may be provided that are not in the above list. |
| 25.054 | Effective Date | Always required | mm/dd/yyyy | Cost Data Effective Date Note: If a Cost Service was cited, provide the date the cost service was last updated. Otherwise, provide the date the appraiser pulled the information. |
| 25.055 | Cost Method | Always required | Choose an allowable answer from table (Cost Method) | The methodology used to derive replacement or reproduction building cost in the Cost Approach section. |
| 25.056 | Depreciation Method | Always required | Choose an allowable answer from table (Depreciation Method) | The methodology used to derive depreciated building cost in the Cost Approach section. |
Cost Method (Choose one)
| Allowable Answer | Definition / Additional Guidance |
|---|---|
| Comparative Unit | A method used to derive a cost estimate in terms of dollars per unit of area, or volume, based on known cost of similar structures that are adjusted for time, and physical differences. The cost estimate is then applied to the total building area. Also known as Square Foot Method or Market Extraction Method. |
| Quantity Survey | A cost-estimating method used to derive the total cost of labor and materials for each individual item used in the construction of the improvements (e.g., nails, drywall, bricks, mortar). |
| Unit in Place | A cost-estimating method in which total building cost is estimated by adding together the unit cost for various building components as installed. Also known as Segregated Cost Method. |
| Other (Describe) | Select Other to enter an answer that is not in the above list. |
Depreciation Method (Choose one)
| Allowable Answer | Definition / Additional Guidance |
|---|---|
| Breakdown | A method of estimating depreciation in which the total loss in the value of the property is estimated by analyzing and measuring each cause of depreciation (physical, functional and external) separately. |
| Economic Age-Life | A method of estimating depreciation in which the ratio between the effective age of the building and its total economic life is applied to its current cost of improvements to obtain a lump-sum deduction. Also known as Age-Life. |
| Modified Economic Age-Life | A method of estimating depreciation, in which curable physical and functional depreciation are deducted from the cost of improvements before Economic Age-Life ratios are applied. Total depreciation is the sum of the accumulated curable elements and the Economic Age-Life lump sum. |
| Other (Describe) | Select Other to enter an answer that is not in the above list. |
Cost Approach Commentary#
Cost Approach Commentary
| Report Field ID | Report Label | When to Include | Allowable Answers / Format | Definition / Additional Guidance |
|---|---|---|---|---|
| 25.057 | Cost Approach Commentary | Always required | Free-form | Commentary could include information pertinent to the Cost Approach section that is not captured in the discrete data, or additional details to support the discrete data that is provided. |
Cost Approach Exhibits#
All photos or images related to the Cost Approach section are displayed in the Cost Approach Exhibits subsection. If there are no photos or images, this subsection does not display.
Cost Approach Exhibits
| Report Field ID | Report Label | When to Include | Allowable Answers / Format | Definition / Additional Guidance |
|---|---|---|---|---|
| See iGuide | Cost Approach Exhibits | If applicable | Photos or images | Photos or images relevant to the Cost Approach section may be provided, which display in Cost Approach Exhibits. If the photo or image is not specifically indicated above, a caption may be provided to further identify the photo or image. |