California Real Estate SalespersonProperty Valuation and Financial AnalysisMedium
An appraiser is applying the cost approach using the square foot method. A comparable new building of similar quality and design recently cost $150 per square foot to construct. The subject building has 2,000 square feet of gross building area. What is the estimated reproduction cost new of the subject building?
- A$300,000
- B$450,000
- C$200,000
- D$150,000
Show answer & explanationAnswer & explanation
Correct answer: A. $300,000
The square foot method multiplies the building's total square footage by the current cost per square foot for comparable construction: 2,000 sq ft × $150/sq ft = $300,000.
Why the other options are wrong
- B. This overstates the calculation and does not match the given figures.
- C. This understates the total and does not reflect correct multiplication.
- D. This equals the per-square-foot rate alone, not multiplied by area.
Square Foot Cost Method
A cost approach technique that estimates reproduction or replacement cost by multiplying the building's square footage by a known cost per square foot from comparable construction.
- Formula: Total sq ft × Cost per sq ft
- Most commonly used and simplest cost approach method
- Requires accurate, current comparable cost data
Memory trick: Square feet times price per foot equals total cost.