search of 6 months, at which point they will renew their current apartment lease.
D. A couple searching for a single-family detached unit has limited their search to be in
a specific price range between $350,000 and $400,000.
Let's assume that we are about to appraise a house using the cost approach. The home
was originally constructed in the early 1900s and is one of the last of its kind in this
area. The cost of constructing an exact replica of this residence is estimated to be
$350,000. On our trip to the actual property, we notice that this is the only residential
unit located on this particular road. Based on the current usage of adjacent real estate,
we estimate that the property would be worth an additional $25,000 in its highest and
best use. However, due to the dramatic shift in the perceived safety of the
neighborhood, values of any remaining residential properties in the area have fallen by
$20,000. Due to the home's age, we also notice that there has been a significant amount
of physical deterioration to the building, amounting to an estimate of
$50,000 in lost value. Since the home was built over 100 years ago, the floor plan is
quite obsolete relative to current preferences. This has a detrimental effect on the value
of the property that is estimated to be approximately $15,000. Given this information,
determine the appraised value of the home using the cost approach.