Replacement Cost

Definition: Replacement cost is the current cost of constructing an improvement with equivalent utility using modern materials and methods.

Example

A functionally equivalent building uses current materials instead of duplicating obsolete construction details.

Keep the distinction clear

Equivalent function distinguishes replacement from reproduction, which aims at a replica. Neither figure automatically equals market value.

Related terms

Reproduction Cost · Cost-Depreciation Approach · Cost

Keep studying

Comparable Sales: Adjustments and Weighted Values

References: California DRE: appraisal and valuation concepts

Pronunciation (US): rih-PLAYS-muhnt KAWST (capitals show stress)

Pronunciation reference: Merriam-Webster