cost approach

[sheri4201]

Hello All,
I am doing the cost approach on a side by side duplex and would like to know if you get a more accurate cost by doing each unit seperate or just do the total sf.ft. of the buillding and then add for double the components. Any help would be greatly appreciated.
Thanks in advance.

 

[Mike Boyd]

NO!!

I don't know how the cost service works but in real life, it would cost more to build them individually. The old economy of scale theory. I would do an on-line cost approach using the Marshall Swift service. It costs $8. You have to submit certain details to them and they calculate the costs. You have to add land value, marketing costs, entreprenuerial profit plus any cost that is unique to your community.

 

[Farm Gal]

Hi Sheri! Welcome to the forum!

I personally think it is best to do the whole building and add components, but have heard folks argue for the two unit method as well.

Keep in mind that either way you really are not addressing the central shared wall and/OR foundation - depending on how the structures are built.

Hopefully you have some builders costs to play with, to perhaps reconcile against M&S or whatever costing system you are using?

Whichever way you use keep in mind that the costing books for SFD are not going to recognise some of the economy of scale for building two-fers... nor will the commercial books fully address the two-fer ONLY as opposed to larger multi-family.

It ain't a perfect world!

 

[Mztk1]

It depends.

Side by side duplexes:

In the multi-family section of the M&S there is a townhouse/duplex section. The costs are for one side. If your sides are equal, you do the cost for the one side and you apply it to both sides. If your sides are different and say one is 1200sf and the other is 1000sf you do the cost for the 1200sf and multiply by .545 and then add it to the cost for the 1000sf side multiplied by .455. The central wall, which Lee Ann cautions about, is considered correctly using this method.

If however you have a duplex with a lower level unit and an upper level unit the proper method per the M&S gets a bit trickier. You do not use the duplex/townhouse section but the multiple housing section. You double the total living area of the property and you double the number of units. So, if you have a 1000sf upper level unit and a 1000sf lower level unit you use "4" units and "4,000sf" from the multiple section and multiple that figure by the actual living area of the duplex. All other lump sum adjustments that get added should be taken from the multiple unit section as you would normally do.

The average townhouse/duplex costs are on page Mul-29; the average multiple residence costs are on page Mul-11.

 

[Lee Lansford]

Hello All,
I am doing the cost approach on a side by side duplex and would like to know if you get a more accurate cost by doing each unit seperate or just do the total sf.ft. of the buillding and then add for double the components. Any help would be greatly appreciated.
Thanks in advance.

Which cost manual are you using?

 

[sheri4201]

Hello all,
My duplex is a 1 story side by side w/bsmt. exact replica of each other. I was going to maybe use swift estimator or M&S hand book.
Thanks

 

[Terrel L. Shields]

National Building Cost Manual has a section for duplexes (2 and 3 units), 4 - 9 units, and 10+ units under Multiple family

 

[Zambendorf]

Reconstruction vs New Contruction

If you want reconstruction cost (for insurance purposes) vs. new construction you should use MSB RCT rather than SwiftEstimator.

Try accucoverage.com - it should handle duplexes as well as single family.

If you do in volume, you can get subscription to RCT through M&S LA sales team. It would cut transaction cost by >50%.

 

[Terrel L. Shields]

nixon-
Reconstruction cost will give you an inflated cost...reconstructing costs more than replacement. You work for M & S? If so, my question is why not bring back the old BoeckhCheck software. Very easy to handle, intuitive with 2 methods of doing it, and cheaper to boot. RCT is the very reason I quit M & S. When they bought my software company (Boeckh) they replaced my subscription, which was already paid, with that piece of spit and didn't even offer to refund my money or some part of it. It gave me a much inflated cost and I was unable to use it. The reply to my complaint was pretty much...Boeckh was for insurance (not) take it and like it.
I will never knowingly buy another M & S product.

 

[Zambendorf]

I used to work for MSB but I recently left to establish an independent consulting practice. The merger was before my time and relatively few employees from the pre-merger days remain.
Using cost estimates based on "new construction" basis for insurance purposes will likely result in inadequate limit for recovery in the event of a total loss and/or increased potential for co-insurance penalty. The option for "reconstruction" basis was added to RCT and BVS (and not swift estimator or CE) to address the gap - you can find white papers on-line describing the difference. RCT/BVS are the tools marketed to insurance agents/carriers; many appraisers don't seem to be aware of this, which is why I offered my original post.
After every hurricane, flood, earthquake, or torando you'll find stories in the press about consumers (residential and commercial) learning they had inadequate coverage to replace what was lost. In my opinion, using the wrong basis unnecessarily contributes to this problem.
Another issue that contributes to underinsurance is professionals entering inaccurate details into their estimates. "Quick Quote" options were removed at the request/demand of regulators and carriers because they were being abused.
As I understand it, the appraisals done to support real-estate transactions aren't supposed to be used for insurance purposes, and there are standard associated with the cost-approach that must be adhered to. But, if you're told the intended use of your appraisal is for insurance purposes I think you should consider using a tool best suited for that purpose, maybe you can get some additional fee income for this value added service.