Cost Depreciation approach is a form of appraisal in which the appraiser estimates the current market value of the home by estimating the cost of reconstructing the home (to include any improvements) plus the value of the land minus the estimated depreciation of the home since the home was first built.  

Depreciation is the loss in value caused by wear and tear over time such as exposure to the sun, peeling paint, home with only an evaporative cooler instead of an air-conditioner, change in zoning or excessive noise and traffic which are considered negative conditions outside of the property.