One of the changes that FNMA made in the new URAR was to eliminate the requirement for the cost approach in the development of an opinion of value.  That is not to say that the cost approach is never used.  It is up to the appraiser to determine if the cost approach is necessary to develop a credible result. 

It is this appraiser’s experience that in the current market the cost approach has not been relevant in arriving at an estimated opinion of value and is not necessary to make a “creditable appraisal” for most residential assignments.  The exception is for new construction or for homes under 24 months old.

They made another change as well in the language of the report; the appraiser is required to, "Provide adequate information for the lender/client to replicate your cost figures and calculations." This includes but is not limited to the source of the cost data and the quality rating from the cost service.  An appraiser can no longer use his own files, or previous experience to estimate the costs. 

Some lenders and/or investors require the cost approach to be completed. This requires us to use a cost service. We use Marshall & Swift, and we spend at least an additional 30 minutes developing the data and the form.  Less than 1% of our work since the new forms started being used includes the cost approach.

Should you require the cost approach to be completed, it must be ordered before the report is completed.  There is an additional fee in most cases.  If the cost approach is ordered after the appraisal has been prepared and delivered, the fee for the cost approach is higher.