njda home
An introduction to estimating the replacement cost
of an existing Livestock Barn, Class 151

The purpose of this demonstration appraisal is to review the cost valuation techniques applicable to the assessment of older type farm buildings that an assessor encounters in reassessment programs. The scope of this report is limited to the cost approach for building replacement value using the original type specifications provided on page II-109 of this handbook.

The steps in the cost approach to the building value are as follows:

  • Estimate the replacement cost new of the improvements using the Class 151 cost specifications.

  • Estimate functional depreciation by comparing the replacement cost of the original building to the cost of the an alternate structure derived through the PF 161 series buildings. The difference between the replacement cost and the substitution cost from the PF series building is the functional depreciation attributable to the dairy barn.

  • Deduct the functional depreciation from the new replacement cost calculated for the Class 151 building.

  • Estimate depreciation from all sources, physical, economic and deduct all accrued depreciation from the improvements to arrive at a present day depreciated cost.

The first step listed above (Estimate Reproduction Cost New of the Improvements) is of major concern in this report. This cost is done in a detailed manner to promote an understanding of the appraisal manual and demonstrate its uniform application throughout New Jersey.

Class 151 includes all farm buildings having a structural frame of wood with exterior wall of wood and/or concrete block or wood on frame or equivalent. Buildings in this class have a masonry foundation or equal with a concrete slab as the floor.

The base specifications for this demonstration of a Class 151 are found in Volume II, page II-109 of the Real Property Appraisal Manual.

For purposes of this demonstration the cost conversion factor of 2.79 for farm buildings series 150 through 156 is found on the 1997 revised cost conversion table. Guidelines for suggested effective age depreciation tables for the subject building are to be found on page II-137.

Procedure for a Livestock Building Appraisal

The base area replacement cost given for this Class 151
is determined in the following manner:

  1. Measure and calculate the square footage of ground area.

  2. Establish the standard height factor to be used. In this type of livestock barn with storage and a gambrel roof, the unit cost are based on cubic foot calculations with or without a loft. The building height is determined through the following procedure. The height component is calculated by adding the side wall elevation with two thirds (2/3) of the roof height from the eves to the roof peak.

    For the subject building the width of 50 X 125 of length = 6,250 square feet of floor area. Using a height factor of twenty (20) feet (14' (wall) + 6' (roof)) multiplied by the ground area results in a building volume of 125,000 cubic feet. Note: See step #5

  3. Sketch the building dimensions using a floor view with a side illustration to display the height profile. Clearly label all the dimensions to ensure accuracy in the area calculations.

  4. In the note section of the property record card describe the structure, list the building materials, quality of construction, the year built, the observed physical condition and all relevant information that may affect its value.

    For purposes of this demonstration, the selected samples of a property record card were adjusted in size to fit the page dimensions.

  5. Under the section of ACCESSORY AND FARM BUILDINGS enter the class identification number, building description, quality grade, width, length and building height.

  6. Using the building dimensions derived from the example, calculate the building area and apply the unit costs, quality factors and cost conversion factor to arrive at the RCN (Replacement Cost, New) value of $279,000. In this demonstration physical curable and incurable depreciation is estimated by using the AGE / LIFE method. The structure is 40 years old, in average condition and has a typical economic life of 60 years.

    40 years actual = 67% physical depreciation
    60 years economic
    {Replacement Cost New ( $279,000 ) X .67 = $186,930. = physical depreciation

    Replacement Cost New       $279,000
    Less physical depreciation $186,930
    RCNLD                       $92,070

  7. Functional obsolescence in the subject property was extracted by comparing the cost new of a traditional 151 livestock barn to a PF series 161. As defined functional obsolescence is an element of accrued depreciation: a defect caused by a flaw in the structure, material or design of the building. The subject building costs out new at $279,000 in contrast to a PF series of $86,099. This change in design, building techniques and construction materials reflects the 69% adjustment made for functional depreciation. As per the following example a basic PF 161 livestock barn of 50' X 125' was modified with the additions to base specifications to reflect current day replacement structure for the traditional class 151 building.

    Class 151 Reproduction cost new $279,000
    Class PF 161 Replacement cost new -$86,099

    $192,901 / $279,000 = 69% functional obsolescence*
    RCNLD $92,070 X .69 = $63,528 = Deduction for functional elements *

  8. In the subject demonstration a 15 % adjustment was made for economic obsolescence.** Economic obsolescence as defined is an element of accrued depreciation; an incurable defect caused by negative influences outside the property itself. When an Assessor can measure and justify an adjustment for loss in value due to external conditions, then a factor for economic obsolescence is warranted. For example the decline in demand for dairy barns due to the general diminution of dairy farms in New Jersey was reflected in the above adjustment of economic obsolescence
nj state graphic contact us privacy notice legal statement NJ Home Page



NJ Home My NJ NJ People NJ Business NJ Government Departments