The cost approach to appraisal is not very helpful when evaluating an "old structure" with "functional deficiencies" because it is hard to accurately calculate the amount of depreciation due to both the age and condition of the property. This is not a problem when appraising newer properties or estimating what it will cost to develop a property.
These are questions that the above text answers:
1. Why is the cost approach to appraisal not very helpful for evaluating an "old structure" with "functional deficiencies"?
2. What are the limitations of the cost approach when appraising properties with both age and condition factors?
3. What factors make it difficult to determine the amount of depreciation for properties with age and condition issues?
4. What types of properties are more suitable for the cost approach to appraisal?
5. What is the main advantage of the cost approach when appraising newer properties?
6. What is the main disadvantage of the cost approach when appraising older properties?
7. What is the primary purpose of the cost approach when evaluating property development costs?