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The Appraisal Replacement Cost Method


The value of the land is deducted from overall value:

When using the replacement cost method of property valuation, the structure(s) alone are considered. The value of the land is deducted from overall value to arrive at the value of the structure.

Determine the value of the structure by construction cost estimation:

Much like a builder bidding to construct a home, the appraiser calculates the material and labor necessary to construct a duplicate of the structure. All aspects of the construction are taken into consideration. Certain models can be found on the internet that make this process easier. There are also books for appraisers that estimate construction costs and they are updated regularly.

Cost per square foot is sometimes used from contruction cost sources:

There are some resources, both in print and on the internet, for appraisers that give a cost per square foot to construct each type of structure and also porches, garages and out-buildings. Using these, the appraiser would multiply the square foot cost by the structure square footages for a value estimate.

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