Why are the cost from Marshall & Swift so low?

[SunbeltAppraisals]

Why are the cost from Marshall & Swift so low?

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


Thank you!!

 

[panappr]

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?

 

[Peter LeQuire]

1.) Builders always say that.

2.) Builders think in terms of package costs.

3.) Builders always say that.

 

[CANative]

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.

 

[Caligirl]

In my experience as a homeowner M&S is running around +/-30% below actuals.

 

[CANative]

Residential cost approaches are caca because they're meaningless.

 

[Elliott]

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.

 

[CANative]

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.

 

[Pilgrum]

Residential cost approaches are caca because they're meaningless.

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?

 

[CANative]

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?

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.