Which term refers to the direct cost of creation in real estate values?

• A. Objective Value
• B. Subjective Value
• C. Market Value
• D. Real Estate Recovery

Answer: (A)

Direct creation cost is captured by objective value because it reflects the tangible, measurable investment required to build or reproduce the property. It encompasses materials, labor, permits, fees, and other production expenses, and it remains independent of what buyers personally desire or of current market conditions. This is the basis for the cost approach in appraisal, where value is estimated from replacement or reproduction cost minus depreciation. By contrast, subjective value depends on individual preferences, market value is what the market will pay under current conditions, and Real Estate Recovery isn’t a standard term used for this concept.