Reproduction and Replacement Cost

Reproduction Cost and Replacement Cost are two concepts which under certain circumstances may be equal, however are very distinct in definition. The "Basics of Real Estate Appraising", Fourth Edition, defines Reproduction Cost as...

"the actual cost as at the effective date of the appraisal, to reproduce an exact replica of the subject improvements. If the materials in the subject building are unique or out‐of‐date, and not available in the current marketplace, the cost estimate must be based on the use of highly similar materials."

The "Basics of Real Estate Appraising", Fourth Edition, defines Replacement Cost as...

"based on the cost of replacing the subject utility with a structure providing similar utility. This cost estimate is not necessarily based on similar materials, and in fact could include quite dissimilar materials, if considered appropriate by the appraiser. For example, assume that the subject building was constructed many years ago and contains exceptionally high ceilings. This antiquated construction standard does not recognize the problems associated with heat loss, wasted space, etc., and would not be acceptable to current construction standards. In this instance, the replacement cost would be based on current market requirements, thereby disregarding out-of-date high ceilings."