Final answer:
An appraiser using the unit-in-place method breaks down the building into components, estimates the cost of each, sums them up, and considers additional elements to estimate a building's reproduction cost, requiring a detailed understanding of construction practices and costs.
Step-by-step explanation:
To use the unit-in-place method to estimate a building's reproduction cost, the appraiser must adopt a systematic approach. The most relevant steps involve breaking down the building into its individual components. Here's how an appraiser might execute the steps:
- First, identify the individual components of the building such as the foundation, walls, roofing, and other structural elements.
- Second, estimate the cost of each component by measuring the quantities needed and multiplying by the unit cost. Construction cost manuals and databases are commonly used for obtaining accurate unit costs.
- Thirdly, calculate the total costs by summing the costs of all the individual components.
- Fourthly, consider extra components like windows, doors, and finishing, which also contribute to the overall reproduction cost of the building.
This method requires a detailed understanding of construction techniques and costs, including materials and labor. Tools like measuring tapes for distance and calculators for area measurements are essential in obtaining accurate estimates.
Estimating costs accurately is important for investment purposes, such as when a property is getting appraised for sale or for insurance coverage. It’s a method that leans heavily on the appraiser’s expertise and thorough knowledge of current construction prices.
As part of their workflow, appraisers must also keep abreast of monthly surveys of construction and annual surveys of expenditures on physical capital equipment provided by agencies like the Census Bureau, as such data can influence cost estimates.