What does the Unit-in-Place Cost Method compute?

The Unit-in-Place Cost Method specifically calculates the cost of each component of a structure as it is installed on the site. This method involves determining the cost per unit of various parts of the building, including labor, materials, and overhead, and then aggregating those costs to reflect the total cost of construction for that specific installed unit.

By focusing on individual units, such as walls, roofing, or plumbing systems, the Unit-in-Place Cost Method allows appraisers to assess the value of real estate based on the specific costs associated with the property’s components rather than just a broad overall estimate of the entire property. This approach is particularly useful in accurate cost estimation for unique or customized properties, where each unit may have varying specifications that affect the total cost.

In contrast, estimating the cost of the entire property refers to a more holistic approach that might involve different appraisal methods, such as the sales comparison or income approach. Similarly, computing the total land value or maintenance cost estimates would fall outside the scope of what the Unit-in-Place Cost Method is designed to accomplish.