Cost Approach (Méthode du coût)

The Cost Approach is based on the determination of the cost of replacing a property, with adjustments for depreciation and obsolescence. The value of the land, as if vacant, is then added to the depreciated value of the improvements to produce a total value. The Cost Approach is most pertinent to special use properties with little income orientation or marketplace attention. It is typically a good indication for new properties with minimal depreciation. However, it does not take into consideration investor criteria or operational risks and is therefore usually given the least consideration in the valuation process.