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<br />1 <br />I, <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />1 <br />I <br />1 <br />1 <br />1 <br />I <br />I <br />I <br />I <br /> <br />APPRAISAL PROCESS - Continued: <br /> <br />which are typically purchased as income producing facilities. <br />The basic steps within this approach are; estimate gross <br />annual income, deduct all operating expenses from the gross <br />income estimate, and ,capitalize net income into a value esti- <br />mate. The quality of ~his approach is also directly .related <br />to the availability of reliable data. <br /> <br />The Cost Approach realizes that a prudent purchaser would pay <br />no more than the cost of bringing into existence a substitute <br />property which 'offers the same utility as the subject. There <br />'are three major steps within this approach. They include the <br />estimation of site value, the cost new estimate of all impro- <br />vements and the estimation of total accrued depreciation. The <br />value estimate is based on the sum total of th~ depreciated <br />value of all impr?vements plus land 'value. 'This approach is <br />considered to be most applicable'wheri estimating the market <br />value of new or recently developed properties. The estimate <br />of accrued Qepreciation is g~nerally considered the weakest <br />portion of the analysis. <br /> <br />The final value estimate is based on the reconciliation of <br />the value indications within the three approaches. It is <br />considered, to be the solution to the problem which was orig- <br />inally set forth. <br /> <br />6 <br />