COST APPROACH

That approach in appraisal analysis which is based on the proposition that the informed purchaser would pay no more than the cost of producing a substitute property with same utility as the subject. It is particularly applicable when the property being appraised involves relatively new improvements which represent the highest and best use of the land or when relatively unique or specialized improvements are located on the site and for which there exists no comparable properties on the market.

As can be seen from definition above, the Cost Approach is most beneficial when with new or nearly new structures. Due to the fact subject is vacant land only, the Cost Approach is not applicable in this appraisal assignment.