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Why are the cost from Marshall & Swift so low?

Discussion in 'General Appraisal Discussion' started by SunbeltAppraisals, Aug 9, 2010.

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  1. SunbeltAppraisals

    SunbeltAppraisals Sophomore Member

    0
    Aug 29, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    Why are the cost from Marshall & Swift so low?

    According to some builder friends, home cant be contructed for those cost.


    Thank you!!
     
  2. panappr

    panappr Senior Member

    3
    Dec 5, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Same issue here in Los Angeles..... Local builders claim 20-25% low. M/S claims you can add a contingency due to fluctuating costs, isn't that their job? :shrug:
     
    Last edited: Aug 9, 2010
  3. Peter LeQuire

    Peter LeQuire Elite Member

    69
    Jan 3, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    Tennessee
    1.) Builders always say that.

    2.) Builders think in terms of package costs.

    3.) Builders always say that.
     
  4. CANative

    CANative Elite Member

    122
    Jun 18, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Costs are very local and M&S local modifiers are not. Costs can changed from day to day or week to week. Costs do no include entrepreneurial incentive and how EI is added depends on the builders point of view. If the builder is also the developer then then the M&S costs are going to look low because they are including it in their costs and M&S isn't.
     
  5. Caligirl

    Caligirl Senior Member

    0
    Jan 27, 2006
    Professional Status:
    Certified General Appraiser
    State:
    California
    In my experience as a homeowner M&S is running around +/-30% below actuals.
     
  6. CANative

    CANative Elite Member

    122
    Jun 18, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Residential cost approaches are caca because they're meaningless.
     
  7. Elliott

    Elliott Elite Member

    29
    Apr 23, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Oregon
    Why M&S so low, because you didn't intergrate it to your local market?
    Its only a relative cost curve forumula. It doesn't work out of the box.
     
  8. CANative

    CANative Elite Member

    122
    Jun 18, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Agree with Elliot. And if M&S is wrong then the appraiser should use local builder costs... if they expect some credibility for a cost approach.

    M&S is about 80% low for areas along the Sonoma and Mendocino coasts.
     
  9. Pilgrum

    Pilgrum Senior Member

    23
    Mar 6, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    Nevada
    I agree. Especially in light of the current economic situation.
    Costs for labor and materials have not declined. And permit and other costs charged by the municipalities have gone up. Only site costs have declined at a rate approaching home sale prices.
    Also it seems to me that many appraisers try awfully hard to get the Cost Approach at, or near, the value indicated by the sales approach. Why?
     
  10. CANative

    CANative Elite Member

    122
    Jun 18, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    a) they were improperly trained and didn't bother to get additional and necessary education;

    b) they don't want to go through the painful process of reconciling and explaining why it is different;

    c) they don't understanding the reasons and meaning when the two approaches vary significantly.
     
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