In the cost approach, what does "cost to cure" refer to?

"Cost to cure" in the context of the cost approach refers specifically to the expenses associated with correcting deficiencies or obsolescence in a property. When appraisers assess a property's value using the cost approach, they consider not only the cost to construct or replace the property but also any costs required to bring the property back to a condition that reflects its highest and best use.

This concept is vital in ensuring that a property's value accurately reflects its potential in the market after addressing any physical issues or functional obsolescence. For example, if a building has outdated systems or structural deficiencies, the cost to cure would include the necessary repairs or upgrades required to restore or enhance the property’s value. By clearly identifying and calculating these costs, an appraiser can provide a more accurate valuation that considers the impact of deficiencies on the property's marketability.