Which appraisal method considers the cost to construct a property as well as land value?

The cost approach is a method used in property appraisal that involves determining the cost to reproduce or replace the improvements on a property, alongside the value of the underlying land. This approach is particularly useful for valuing new constructions or properties with unique characteristics where there are not enough comparable sales available.

In the cost approach, the appraiser calculates the present value by adding the current cost of constructing the building or improvements (including labor, materials, and overhead) to the value of the land as if it were vacant. This method takes into consideration factors such as depreciation, where the appraiser assesses how much value has been lost due to physical deterioration or obsolescence.

The other methods mentioned, such as the income approach and the sales comparison approach, focus more on different aspects of property value. The income approach stresses the revenue-generating potential of the property, while the sales comparison approach bases value on recent sales of comparable properties. The market approach typically refers to assessing property value using current market conditions and comparable sales data. None of these methods directly incorporates both construction costs and land value in the same manner as the cost approach does.