Cost Approach

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FLORIDA REAL ESTATE SALES ASSOCIATE COURSE

Real Estate Appraisal

Section 19 of 26

Cost ApproachThe Cost Approach is based on the idea that a knowledgeable buyer would pay no more for a property than the cost to purchase land and build a brand-new, equivalent structure on it. It treats the value of the land and the building separately. The formula is: (Cost to Build New - Accrued Depreciation) + Land Value = Estimated Value.