Learning Objectives

1. Identify the new URAR (UAD 3.6) cost approach reporting fields and describe how the updated structure changes cost approach documentation requirements.
2. Explain when the cost approach is applicable and justify its use (or limited use) based on assignment conditions and credibility needs.
3. Identify the case study property characteristics that affect cost, depreciation, and reporting, and summarize the valuation problem to be solved in the cost approach.
4. Select an appropriate cost type (reproduction or replacement), cost method, and cost data source for a given assignment scenario, and state the rationale for the selection.
5. Classify improvements correctly for cost approach reporting (dwelling, outbuildings, site improvements) and apply correct area and component identification within the new URAR structure.
6. Develop an opinion of dwelling replacement cost new using an acceptable cost source, and document inputs and assumptions used in the calculation.
7. Apply a supported depreciation technique for the dwelling and calculate depreciation using either (a) separate physical, functional, and external depreciation or (b) total depreciation, as applicable.
8. Estimate effective age and remaining economic life and document the support for the estimates in a manner suitable for review.
9. Identify outbuilding types using new URAR options and report outbuilding descriptions consistent with the required classifications.
10. Develop a depreciated cost conclusion for outbuildings, including cost support and depreciation support, and summarize the results in the indicated value by cost approach section.
11. Differentiate site improvements from land and from building components and report common site improvements in the appropriate new URAR locations.
12. Develop a site value opinion using the sales comparison method for land, including land comparable selection, adjustment logic, and reporting support.
13. Develop a site value opinion using the extraction method, and evaluate reliability and limitations based on available cost and depreciation support.
14. Develop a site value opinion using the allocation method, and state the data requirements, appropriate use cases, and limitations.
15. Reconcile site value indications from applicable methods and conclude a final site value opinion with supporting rationale.
16. Prepare cost approach commentary and exhibits that support transparency, meet reporting expectations, and improve review readiness, including identification of required maps, calculations, and data summaries.

Important Preclass Download Assignment: For the best learning experience, it is imperative that you download the materials prior to class and come prepared to take notes. You can either print the handbook or bring a laptop with materials saved where they are ready to be accessed. 

This class is fast-paced, and class time will not be spent waiting for students who did not download materials prior to class. 

The electronic files may be obtained by logging on to the Appraisal Institute website at https://ai.appraisalinstitute.org/eweb (click on the three horizontal lines to the left of the AI logo and selecting “My AI Account” from the drop-down menu).