Wait a minute. It is very useful. After being depreciated (in terms of physical depreciation) the remaining amount of money in the cost approach, greater than the market value as determined by the market approach, is remaining depreciation in the form of functional and external in that order.
On older and historic homes it tells you the excess amount per square foot it costs to build this house today--which most people of any level of construction education already knows, at least in concept (maybe not exact quantity).
In horse property this very evident with a significant amount of this form of depreciation noted on every assignment I have ever done.
In this case, what it tells me as a professional and consultant is to advise you the buyer, to buy a horse property.................and not build one--it is cheaper! Better value!
I was out on inspection of a couple of "castles" and this is always the terms of which I am thinking on these inspections--what is the functional and external....and thank god for the cost approach to value. IN ENGLISH, it is begging the question, "what is the limit the typical buyer will pay for a particular item (granite from Australia? hardware from France? Cedar logs, logged form steep slopes? Microwave lumber drying as opposed to kiln..and I mean special order).
The cost approach always tells you something and in unique property it tells you very important items.
I have a new office building from plans and specs I am just finishing. The cost approach is very high due to some combination of functional and/or external. I am leaving it as that----they are not paying me to break it out (beating a dead horse)----But I, in this case, know it is both from my research.
In doing review work, I see the cost approach "cheated-in" on your type of building all the time by less experienced appraisers in this area. Good appraisers will call it in review. You will almost always have a high cost approach on older homes. It must be technically completed to bring "it" in line.