The cost approach is not used in my area at all and is just one component to look at. Market approach is what banks and lenders want. So using cost approach alone is not a true indication of value.

As a Realtor, I don't appraise... ask an appraiser.

I'll leave that to an appraiser to explain...

Sorry, I'm not an appraiser, yet, in high end area where I live, it would not be very reliable.

Not that hard if you have the data.

Cost approach is what builders pay a lot of attention to.

If they home buyer thinks that it is worth more then there is never a problem. 

If the buyer thinks that it is worth less then we have a serious problem.

I am not an appraiser, could not answer your question. 

Researching the current costs to get close to similar quality of items and quality of labor of original costs.

An appraiser would have the answer.

Wouldn't work in CA.

Knowing local costs

 Rarely used.   Maybe by investors, not too many others.

Te lenders want the market appraisal value, not cost.  See what Ron and Alexandra Seigel have to say

Abby,

Market is what matters these day.  The cost approach is used for tear downs and investments.  A

Market approach is what banks and lenders want. So using cost approach alone is not a true indication of value.

abby tiscareno in most residential real estate, cost approach is rarely used.

It is comparable sales approach which is more often used.

Great question for an appraiser. -Kasey

We don't use it.

Where there is great variance. For example, East Palo Alto vs Palo Alto land price. 

from what I remember, the cost approach is ideal for new construction.... there is too much depreciation with anything older....

This is an excellent question for appraisers.  I am not sure how many appraisers frequent this Q&A forum.

Well trained professionals in this field will likely not find this approach to be an issue. 

abby tiscareno Knowing the cost of the materials.

Costs can vary greatly.

Eve

Please read Chapter 8, Appraisals

Don't know, I'm not an appraiser.

I don't use the cost approach.

great question for an appraiser