Which is NOT a step in the Cost Approach to property valuation?

In the Cost Approach to property valuation, the primary focus is on estimating the value of a property based on the cost to replace or reproduce it, adjusted for depreciation, and then including the value of the land. The steps typically involved in this approach include estimating the replacement or reproduction cost, adding the value of the land as separate from the improvements, and deducting any depreciation to reflect the current condition of the property.

Calculating market demand, while an important concept in overall property valuation, is not a direct step in the Cost Approach. This approach relies more on the physical aspects and costs associated with the property rather than market dynamics or demand factors. Therefore, it focuses on concrete costs rather than market trends or consumer interest, making it distinct from approaches like the Sales Comparison Approach, where market demand plays a critical role.

By understanding these steps and their relevance within the Cost Approach, one can appreciate how the method assesses value based on the principle of substitution, meaning a buyer would not pay more for a property than it would cost to create a similar one.