Which of the following statements about cost and value is true?

The correct statement is that cost and value may be the same. This acknowledges that while cost and value can often relate to one another in real estate and other assets, they are not always identical. Cost typically refers to the amount of money spent to acquire or improve a property, whereas value reflects what the market or potential buyers are willing to pay for that property at a given time.

In some situations, particularly when a property is new or has just been improved, the cost of construction or renovation may align closely with the market value. For instance, if a builder spends $500,000 to construct a home, and the market value at completion is also around $500,000, then cost and value are essentially the same in this scenario.

This understanding is critical in real estate practice, as brokers can advise clients on pricing, investment potential, and market trends based on the relationship between cost and value. Awareness of this principle helps in making informed decisions regarding buying, selling, or investing in real estate.