Which method of estimating property value involves calculating replacement costs, depreciation, and land value?

The cost approach is the correct method for estimating property value by calculating replacement costs, depreciation, and land value. This approach involves determining the current cost to replace the structure on the property, then subtracting any depreciation that reflects the decrease in the property’s value due to factors such as wear and tear, obsolescence, or other forms of deterioration. Finally, the value of the land itself is added to this figure, resulting in a comprehensive valuation of the property.

Using the cost approach is particularly useful in scenarios where there are no comparable sales, such as unique properties or newly constructed homes. It provides a solid framework for assessing value based on tangible factors rather than relying on market dynamics or income potential, which are emphasized in other valuation methods.