Which approach focuses on the cost to reproduce a similar structure in estimating value?

The approach that focuses on the cost to reproduce a similar structure when estimating value is the Cost Approach. This method involves determining the value of a property based on the costs associated with constructing a replica of the subject property, taking into account any depreciation factors.

The Cost Approach is particularly useful for valuing properties that are new or unique, where income generation or market sales data may not be readily available. It calculates the current cost of materials and labor necessary to construct the building, plus the value of the land. By comparing these costs with potential depreciation, the appraiser arrives at an estimated value that reflects what a buyer would reasonably pay for a similar property.

This approach is distinguished from others; for instance, the Income Approach estimates value based on the income a property can generate, while the Market Approach relies on recent sales data of comparable properties. The Residual Approach is a method more commonly used in development scenarios where an appraiser assesses property value based on the future income potential to determine land value after considering development costs.