Kostnaðarnálgun

Kostnaðarnálgun, which translates to "cost approach" in English, is a fundamental valuation method used primarily in real estate appraisal. It is based on the principle of substitution, which suggests that a buyer will not pay more for a property than it would cost to acquire a similar property of equal desirability and utility. The cost approach estimates the value of a property by calculating the cost to replace or reproduce the existing structure, then subtracting any depreciation, and finally adding the value of the land.

There are two main methods within the cost approach: reproduction cost and replacement cost. Reproduction cost refers to the cost of creating an exact replica of the existing improvements, using the same materials and design. Replacement cost, on the other hand, is the cost of constructing a new building of similar utility and desirability, using current materials and standards. Replacement cost is generally preferred as it better reflects what a buyer would realistically pay for.

Depreciation is a critical component of the cost approach and accounts for the loss in value of the improvements due to physical deterioration, functional obsolescence, and economic (or external) obsolescence. Physical deterioration relates to wear and tear. Functional obsolescence arises from outdated design or features. Economic obsolescence stems from negative external factors affecting the property's value.

The cost approach is most reliable for newer properties where depreciation is minimal and for special-purpose buildings for which comparable sales data is scarce. For older properties with significant depreciation or for properties where functional or economic obsolescence is a major factor, the cost approach may be less accurate, and other valuation methods like the sales comparison approach or income capitalization approach might be more appropriate.