When is the "Cost Approach" preferred in evaluations?

The Cost Approach is particularly favored when properties are newly constructed or unique and lack comparables. This approach involves estimating the cost to replace or reproduce a property with similar utility, factoring in depreciation to arrive at a value. For newly constructed properties, there are often little to no comparable sales available, making the cost approach a reliable method for determining value since it directly reflects the expenses incurred in construction.

In cases involving unique properties, the cost approach effectively captures the specific characteristics and investment made into that property, which may not be represented in the market through comparable sales. Such uniqueness often leads to a reliance on the cost to replace the property rather than on market-driven incomes or sales, as there may be insufficient data to support those valuations.

While the other options may suggest circumstances where alternative valuation approaches are more suitable, they do not align as closely with the principles of the Cost Approach as the context of newly constructed or unique properties does.