You're not wrong Denis and I know what you meant (just stating "local builders" is a cop out.) For the most part the typical cost sources I use work well (building-cost, the assessor's cost handbook, NADA, etc.). But in some areas, particularly along the Mendocino Coast it all goes out the window because there are no cost modifiers to be found. Over the years I've seen a dozen or so bids on custom builds and have a feel for how much to "adjust the book." But I doubt if I could produce the bids if I had to.
I think this is an excellent example of how the hard data and the appraiser's judgment and experience can work together.
So, in Mendocino County, let's assume you use Builders-Cost.net & the assessor handbook (I think I'd consider the assessor handbook to be superior for that area, but you know it much better than I do). And, after you do the calculations, you determine, based on your experience, that the cost estimate is too low, so you think a modification is warranted (let's say 15% upward).
In your report, you (a) provide the Builders-cost.net data sheet and supplement that with the assessor's handbook estimate (citing the section information and year published... along with the website like you do). Then you add your judgment:
"The published costing sources indicate an RCN $/SF between $130/sf and $140/sf. I've reconciled an indicated RCN of $140/sf. However, in my experience within this market, due to the X, Y, and Z's, these estimates are typically lower than what actual costs are. I've therefore applied a 1.15 modifier and reconciled a $/sf RCN at $161/sf. I then have considered an EI allocation of 15% (see discussion on Entrepreneurial Incentive) , and have rounded my "all in" RCN for the residential and garage improvement at $185/sf."
You've cited two costing sources and have supplemented that with your appraiser judgment of a 15% modifier. The lender can replicate your analysis with your numbers if they want. They can judge, based on your X, Y & Z reasons, if the 15% modifier is reasonable or not. And, they have the information to evaluate your EI allocation as well.
Do you cite a credible source? Yes. Do you provide some explanation and rationale of how your judgment fits into the picture? Yes.
Is it reasonable? I think it is, but that's up to the lender to decide. But the components of how you did your analysis and what your conclusion is, are available for all to read, consider, and evaluate.
Most residential reports I see don't come close to that....and most of those reports are in markets where it isn't that hard to get reasonably reliable cost data, relatively solid land values, or (with a little work) EI estimates.
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