Although frequently maligned as a tool for estimating value, the Cost Approach can be very valuable to the process of developing and reporting a residential appraisal. While it is clearly a distant second to the Sale Comparison Analysis in residential appraising, it can be helpful in identifying "runaway" or "declining" markets, supporting conclusions that a property is "over-built" or developing and supporting "highest & best" use conclusions.
Appraisers need reliable, fast and well documented cost numbers in order to develop and report the cost approach in compliance with USPAP. Workfiles must contain documentation which supports the development of an approach. State Boards are increasingly aggressive in their actions against appraisers that simply "back in" to conclusions without any evidence of actual development.
In addition, Reviewers need a system to verify and replicate cost numbers for the Work Under Review, as well as documentation for their own workfiles. Our Replacement Cost System allows for immediate verification of Replacement Cost calculations when the appraiser cites DwellingCost.com as the source.
Our data consultants bring a vast range of experience across multiple industries, and our analyst team has conducted extensive and rigorous research at the macro, geographic, and industry levels. Through years of development and constant feedback from our industry experts, we have constructed a sophisticated model which quickly and reliably provides workfile support for the development of the Cost Approach.