The cost approach is a real estate valuation method that determines value by calculating the cost to replace the property's improvements, minus accrued depreciation, plus the value of the land. The formula is: (Reproduction/Replacement Cost New) - (Accrued Depreciation) + (Land Value) = Property Value. The question provides the cost to rebuild ($598,720), which is the first component. Therefore, the appraiser's next steps are to subtract the estimated loss in value due to depreciation and then add the estimated value of the land itself.

A. Labor costs are already factored into the total cost to rebuild; adding them again would be double-counting.

C. Land value is a fundamental component of the property's total value and must be added, not subtracted.

D. This option incorrectly omits the crucial step of subtracting accrued depreciation from the cost of the improvements.

1. North Carolina Real Estate Commission. (2023). North Carolina Real Estate Manual. Chapter 16, Real Property Valuation, Section: "The Cost Approach." The manual explicitly outlines the formula as: "Estimate the cost of the improvements as if new... Estimate the amount of accrued depreciation... Deduct the accrued depreciation from the cost new... Estimate the value of the land... Add the estimated land value to the depreciated cost of the improvements." This directly supports subtracting depreciation and adding land value.

2. The Appraisal Institute. (2013). The Appraisal of Real Estate (14th ed.). Chicago, IL. In Chapter 29, "The Cost Approach," the text states, "The basic formula for the cost approach is: Reproduction or replacement cost of the improvements - Accrued depreciation + Site value = Property value" (p. 570). This is the authoritative standard in appraisal practice.

3. Ling, D. C., & Archer, W. R. (2018). Real Estate Principles: A Value Approach (6th ed.). McGraw-Hill Education. Chapter 7, "Valuation Using the Cost Approach," presents the procedure as: "Estimated cost to construct structure today – Estimated accrued depreciation = Depreciated cost of building improvements + Estimated value of the site = Indicated market value by the cost approach." This university-level textbook confirms the required steps.