valuation
replacement cost
Replacement cost is the current cost to build a structure with the same utility and function as the subject property, using modern materials, design, and construction methods. It does not attempt an exact copy. It is commonly used in the cost approach to appraisal, especially for older buildings, and as a basis for insurance. Reproduction cost, by contrast, is the cost of building an exact replica with the same materials.
- Exam tip
- Replacement = same function with modern materials; reproduction = exact duplicate. Historic buildings are the classic reproduction cost example.
- Example
- An appraiser estimates it would cost $280,000 to build a home of equal size and utility today, using modern drywall instead of the original plaster.
Related terms & state variants
Sources
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Last verified: 2026-10-23