Marshall & Swift

[Grace]

I am attempting to use the Marshall & Swift Residential Cost Handbook for the first time.
This is what I think I'm supposed to do:
1. Determine the type and quality of residence which gives you your base cost.
2. Add your lump sum adjustments to your base cost.
3. Determine what your current cost multiplier is and what your local multiplier is.

Now for the stupid question. My current cost multiplier is .99 and my local muliplier is 1.14 Do I just add .99 and 1.14 to my base cost which would equal $93.83. Or would I multiply those figures as follows: 91.70 x .99 x 1.14 which would equal a base cost of $103.49.

My base cost is 91.70
My current cost multiplier is .99
My local multipier is 1.14

Scary, I know.

Thanks
Grace

 

[Elliott]

No silly, you add them. That's the only way
I can get M&S to work in my market. I use
a multiplier 2.13.

elliott

 

[TN Pro]

Grace, Marshall and Swift offer a decent online training course for their product. I think its around $199.

 

[Mr Rex]

Before anybody else gets here and gets ugly. They are multipliers that reflect current cost based on a factor of 1. The 1.14 represents the factor that cost have increased in realtion to the numbers when the M&S data was published (the orignal basis of 1). The .99 reflects your market cost in relation to the above costs. So multiply the multipliers and then multiply your base cost + lump sum and square foot adjustments by the effective multiplier. Please don't take offense when I tell you to get someone who knows how to do this help you until you learn.

 

[Grace]

Thanks Michael & Dean. I don't get offended. I will be taking the online Marshall & Swift Course.

From what I can gather, Marshall & Swift in not realistic. I have three great comps., all 2/1, all built in 2005, and all similar S.F. The comps. indicate a value range of $200,000 to $218,000.

Marshall & Swift indicates a value of $175,000.

What are other appraisers doing in this situation?

Thanks

Grace

 

[Tina]

Are you considering the land Grace?

TB

 

[Grace]

Yes, I put in the land value but Marshall & Swift is still low. I fear that every time I do the cost approach on newer homes, I'll have the same problem.

I wonder if there are more realistic cost guides available. I've spent a small fortune on Marshall & Swift, but I would be willing to pay again, if I didn't have to dread every cost approach appraisal.

Grace

 

[CANative]

There's more to the cost approach than combining the replacement cost of the improvements with raw land values.

 

[Charles Witt]

I find Marshall and Swift is right on stream in our area. Possibly you are missing extras or overusing depreciation. The class is good but I have never taken it. My appraisal program has a Cost Addendum sheet to complete which is a fill in the balnk. M&S has a disk that automatically calculates this for you once you have determined the qualioty, land value, and included all.

 

[Lee Lansford]

Grace,

First...your latter example of how to use the multipliers is the correct method.

Second...Take a look at the BASE cost for "average" and "good" for any one specific design of house and GLA.
Do you notice the comparatively large spread in the numbers?

M&S is providing MEDIAN numbers (costs) as the base costs for each category.

For example, I'm looking at this moment at my M&S Residential Cost Handboook; I am looking at "average" for a one-story, stud-framed, stucco dwelling of 2000 SF. The base cost is $63.04.

Now, look at the same for above except see "good"; the number is $82.97.

The difference is just about $20/sf.

Yes, there are differences (no doubt about it) between "average" and "good" (you can read and interpret on your own). But, keeping in mind that the base costs are MEDIAN costs, there is the option on your part--based upon your knowledge of your market--to shift the base costs up or down by several percent to more accurately reflect your market.

In the first illustration above, why can't the base cost for average for your market be more representative at $69/sf?

And, many houses have combinations of "average", "good" etc.

Depending upon the house, you may not always be able to accurately represent the reproduction costs, but you should be able to reasonably reflect the replacement costs for many SFRs.

Lastly, if you have a source (or, sources) for verifiable local costs, use that!

Good luck.

Lee