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COST APPROACH <br /> In appraising, we typically use three approaches, namely the Cost Approach, the <br /> Income Approach,and the Direct Sales Comparison Approach. <br /> In developing the Cost Approach, we use the cost of replacing the building at <br /> today's cost, less depreciation, plus land to arrive at a Valuation. In the case of a new or <br /> almost new building this is a highly effective tool. However, as the building ages it <br /> becomes increasingly difficult to estimate the amount of accrued depreciation with any <br /> degree of accuracy. In the case of the subject property,we are dealing with an old building, <br /> which, if the Assessor's records give an indication the building was built in approximately <br /> 1900, which would make the original part of the building 115 years old. The Assessor's <br /> records also contain dates of 1926 and 1967 for subsequent additions, which again indicate <br /> we are dealing with an old building. The Marshall Valuation Cost Manual (MVCM) gives <br /> a building such as the subject an economic life of 40-50 years. Quite obviously, the <br /> existing structure has lived its "economic life." This is not to say the building could no <br /> longer be used or has any value,it simply means it is well past its predicted economic life. <br /> On a building that has reached its age, depreciation can no longer be accurately <br /> estimated. It simply becomes a guess on the part of the Appraiser to estimate the amount of <br /> accrued depreciation. Frequently it becomes an erroneous indication of value. When <br /> dealing with a building of this age, it is prudent to eliminate the Cost Approach, since in <br /> reality it is no longer relevant. <br /> Therefore,the Cost Approach has been eliminated from this report. <br /> i - <br /> 25 <br />