Which of the following methods is commonly used to estimate the cost to replace a property?

The cost approach is a method used to estimate the value of a property by determining the cost to replace or reproduce the improvements on the site, minus any depreciation. This approach is particularly useful for properties that do not frequently sell in the market or are unique, such as schools, churches, or special-use buildings.

In this approach, the appraiser assesses the current cost to construct a similar property using modern materials and construction methods, then adjusts for any loss in value due to physical wear and tear, functional obsolescence, or external factors. The final value reflects what it would cost to replace the existing structure, thereby providing a direct estimate of value based on construction costs.

The other methods—such as the income approach, which focuses on the property's ability to generate income, and the sales comparison approach, which relies on comparable sales data to determine value—are not specifically geared toward estimating replacement costs. The capitalization approach, often linked to the income method, involves converting income streams into property value but does not address construction costs directly. Thus, the cost approach is the most relevant method for estimating the cost to replace a property.