Fathom Realty
The cost approach is one of the three main methods used in real estate to calculate the value of a property. Understanding how it works may be beneficial in your next property purchase.
The cost approach method is the comparison of the price a buyer would pay for a property in comparison to the cost of building the same property from scratch. This includes the land value the property sits on, the cost of building materials needed to construct the property and less depreciation.
The cost approach appraisal is often used in the construction of exclusive-use properties. This includes but is not limited to libraries, schools, religious properties and more.
These building types generally don’t bring in much income, so using the comparable or income approach (two different methods to figure out the value of a property) won’t bring in accurate results.
The cost approach is often used in new construction, as market value is reliant upon project quality and completion. Each stage of the project is reappraised to allow the release of funds to complete the following steps of the project.
Cost approach is calculated using this formula: property values = land values plus cost new + depreciation.
Please note, a low-cost approach appraisal can be a sign of an overactive market, so it’s best to hire a professional advisor when purchasing a new construction or an exclusive use property.
With over 10 years experience serving the Dallas and metro area, I am dedicated to providing my clients with outstanding customer service and to earning the referral business of my clients. I focus on family values and customer service. I have made a lot of friends in this business. Constant communication is a big part of my success. Proven professional who brings knowledge, skill and care to every transaction. I would love to be your realtor and if you know of anyone who is thinking about buying or selling a home or would just like additional information about property values in my area then call, text or email me today. If you or someone you know are a veteran, firefighter, policeman, teacher, doctor, nurse contact me about special incentives. If you or someone you know has a blemish on your credit report and is not in active bankruptcy contact me about a new company that can help you get into a home. If you need a reputable credit repair company that will give you help to get back on the right track then I have a great company. If you want to purchase a home but still don't have enough saved there are still available funds to help you with that. Are you or someone you know relocating to the Dallas area? I have helped families relocate here. I understand your family's needs. Certifications: New Home Construction, Senior Designation, American Warrior, First Time Home Buyer, EPRO,Relocation
