Using a published cost manual, an appraiser determines that the construction cost of a 2,500 square foot dwelling is $400,000. This figure represents the dwelling's:

• A. Cost
• B. Value
• C. Price
• D. Appraisal fee

Answer: (A)

The key idea is that the figure from a cost manual represents construction cost—the amount required to build the dwelling as estimated by the manual. In this case, $400,000 is the cost to construct the 2,500-square-foot home (often replacement cost new, depending on the manual’s basis), not its market value, not the sale price someone would pay, and not the fee charged for the appraisal. Value would reflect what the property is worth in the market after considering demand and depreciation, price is the transaction amount, and the appraisal fee is just the charge for performing the appraisal.