Which appraisal approach would likely use the replacement cost as a basis for valuation?

The correct choice revolves around the concept of the Cost Approach, which is fundamentally grounded in the idea of replacement cost. In this approach, the appraiser estimates the value of a property by determining the cost to replace the improvements that are on the property, minus any depreciation that these improvements may have experienced.

This method is particularly relevant in situations where there are few comparable sales or when dealing with unique properties where the market data may not reliably reflect current conditions. It allows for a clear understanding of the intrinsic value of the property based on what it would cost to recreate it, considering current construction costs and the physical wear and tear of the existing structures.

In comparison, the other approaches focus on different methodologies. The Sales Comparison Approach leverages recent sales data from similar properties to determine market value, while the Income Approach capitalizes on the revenue generation potential of an investment property, typically using projected income and capitalization rates. The Comparative Approach is often synonymous with the Sales Comparison Approach and does not specifically relate to the cost basis. Therefore, the focus on replacement cost makes the Cost Approach the definitive answer to the question about valuation methodology.