# Cost Approach

> Cost Approach translates a unique property into a supportable opinion of value

| Field | Value |
|---|---|
| Stable ID | `node:kiduna:real-estate-mortgage:appraisal-valuation:cost-approach` |
| Family | Appraisal & Valuation |
| Domain | Economics |
| Era | Institutional Age → Agentic Age |
| Kind | metric-or-force |
| Archetype | The Clock |
| Claim layers | empirical, cultural_historical, synthesis, interpretive, symbolic_divinatory |

## What it is

Cost Approach is a metric or force in the Appraisal & Valuation family, defined here by the function it performs in the property system rather than by label alone.

## What it actually does

Cost Approach translates a unique property into a supportable opinion of value.

## Why it exists

It exists because place is unique and immovable while law, capital, information, and human lives must still coordinate around it across time.

## System mechanics

- **Who uses it:** underwriter, appraiser, investor, developer, regulator
- **Incentives:** comparability, predictive usefulness, decision speed, auditability
- **Inputs:** observations, definitions, time period, comparison set
- **Outputs:** signal, comparison, threshold, decision input
- **Dependencies:** Land, Authority, Information, Capital, Time

## Archetypal reading

- **Essence:** Cost Approach translates a unique property into a supportable opinion of value
- **Gift:** Clarity about cost approach makes a hidden allocation of place, time, authority, value, or risk available for deliberate choice.
- **Wound / Shadow:** When cost approach is treated as neutral or inevitable, its costs can be shifted to people who hold less information, authority, liquidity, or mobility.
- **Failure mode:** The failure mode appears when cost approach is stale, opaque, mispriced, misrecorded, overextended, or applied outside the conditions that made it useful.

## Lenses

- **Personal:** Notice where cost approach appears as a structure in your own commitments: what is held, promised, priced, protected, excluded, or deferred?
- **Business:** Cost Approach reveals a handoff among information, authority, incentives, operating work, and capital. Make the owner of each handoff explicit.
- **Financial:** Cost Approach changes the timing, priority, comparability, liquidity, or distribution of cash flow and risk.
- **Property:** Cost Approach changes how a physical place can be used, valued, financed, transferred, occupied, maintained, or reclaimed.
- **Community:** Cost Approach can create benefits inside one parcel while exporting costs or opportunity to neighbors, institutions, or future residents.

## Divination

The Clock enters the reading through Cost Approach. The issue is not only what is visible; it is which map of ownership, time, risk, authority, or belonging currently governs the situation.

**Question:** What is Cost Approach measuring—and which important reality has been left outside the denominator?

**Guidance:** Change the denominator, time horizon, and stakeholder. If the conclusion changes, the map—not only the number—was doing the work.

## Game function

Sets or modifies a threshold; players may stress it by changing rates, time, or cash flow. Initiative 2.

## Relationships

- **Structural Inspection depends on Cost Approach.** Structural Inspection depends on Cost Approach through a change in rights, information, cash flow, priority, timing, or physical use.
- **Income Approach enables Cost Approach.** Income Approach enables Cost Approach through a change in rights, information, cash flow, priority, timing, or physical use.
- **Cost Approach prices Comparable Sale.** Cost Approach prices Comparable Sale through a change in rights, information, cash flow, priority, timing, or physical use.
- **Cost Approach constrains Balloon Mortgage.** Cost Approach constrains Balloon Mortgage through a change in rights, information, cash flow, priority, timing, or physical use.

## Oppositions

- Market Value versus Meaning
- Standardization versus Uniqueness

## Historical lineage and regulatory context

Read Cost Approach through the lineage of Appraisal & Valuation: earlier customary or local arrangements became recorded, standardized, financed, regulated, digitized, or contested over time.

Rules vary by jurisdiction and transaction. Use the cited primary sources as starting points and verify current local law, program guides, contracts, and professional standards before operational use.

## Visual direction

Text-free rounded-square enamel artifact for Cost Approach: a calibrated enamel field where one measured boundary visibly changes the exposed and submerged portions of an asset; vitreous midnight enamel, blackened steel, warm brass, copper accents, mortgage-paper cream, deep green, slate, and sky blue.

## Engine output / Sentinel handoff

The generative interpretation above is preserved as Engine Output. Sentinel factors: jurisdiction-specific rules, factual uncertainty. These factors request contextual review; they do not delete or silently rewrite the candidate.

## Research / provenance

- [Uniform Standards of Professional Appraisal Practice](https://appraisalfoundation.org/pages/uspap) — The Appraisal Foundation; appraisal ethics, development, reporting, review.
- [Quality Control Standards for Automated Valuation Models](https://www.consumerfinance.gov/compliance/compliance-resources/mortgage-resources/quality-control-standards-for-automated-valuation-models/) — Consumer Financial Protection Bureau; AVM controls and valuation technology.
- [Fannie Mae Selling Guide](https://singlefamily.fanniemae.com/media/document/pdf/selling-guide-february-4-2026) — Fannie Mae; loan eligibility, underwriting, appraisal, delivery.
