The steps in estimating the cost approach to value follow:

1. | Estimate the value of the land |

2. | Estimate the "as is" value of site improvements |

3. | Estimate the cost new of the improvements |

4. | Estimate all 3 types of depreciation |

5. | The indicated value by the cost approach is the sum of lines 1-3 minus depreciation (line 4) |

The basic cost approach formula is:

Value = Cost - Depreciation + Site

where

1. | Depreciation is the sum of physical deterioration, functional obsolescence, and external obsolescence. |

2. | Site is the sum of the lot value, site improvements, and landscaping. |

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