The main objective of the cost approach is to measure what?

The primary aim of the cost approach is to determine the value of a property by estimating the cost to replace or reproduce the improvements, subtracting any associated depreciation. This method is particularly relevant when appraising properties that do not frequently sell or in cases where there are not enough comparable sales to rely on. By calculating the cost of the land and the current cost to build the structure, then deducting depreciation for factors such as physical wear and tear, functional obsolescence, or external obsolescence, appraisers arrive at a value that reflects what the property would likely sell for in the current market. This approach is particularly useful for new constructions or unique properties where market data may not provide reliable indicators of value. Thus, the cost approach effectively aims to measure the value by using cost as a foundational piece of the analysis.