What type of buildings does the Cost Approach typically apply to?

The Cost Approach is particularly well-suited for service buildings like schools and libraries because it focuses on determining the value based on the cost to replace or reproduce the property, minus depreciation. This method is effective for properties that do not frequently change hands and where income generation is not the primary concern.

Service buildings often have unique structures and specialized uses that commercial or residential properties might not possess, making it challenging to apply the Sales Comparison Approach. Since these properties are typically government-owned or not-for-profit, they can be valued based on their construction costs, including the land value, rather than market transactions. This helps to establish a clear and justified value that reflects the cost to build.

In contrast, while the Cost Approach can be used for other options like high-rise apartments, residential houses, or historical buildings, these types tend to be better assessed through different valuation methods such as the Sales Comparison Approach due to their market involvement and distinct characteristics influencing their value.