Columbia University Libraries Digital Collections: The Real Estate Record

Real estate record and builders' guide: v. 21, no. 516: February 2, 1878

Text version:

Real Estate Record AND BUILDERS' GUIDE. YoL. XXI. NEW YORK, SATURDAY, FEBRUARY 2, 1878. No. .516. Published Weekly by C^e Ulcal €sf aic S^ toi"^ ^ssodaiiait. TERJIS. OiVE YEAR, in advance.. ..SlO.OO. Communications should be addressed to C. AV. SWEET, Nos. :M5 AND 347 Broadway. THE ECONOMICS OF BUILDING. III. COSTS. Probably no item of public concern gives rise to more pretentious assertion, based upon inade¬ quate data, or to more misleading statoinents, than do the costs of building. As divergent as estimates usually are w-ith regard to the value of a given plot of vacant laud, they seem harmoni¬ ous when compared with the wide disi)arity of statements which we are accustomed to hear with regard to building costs. The manufacture of buddings iu some respects is not unlike the manufacture of ready-made clothing ; the material and workmiuiship in either case admitting of endless varieties of quality and degrees of skill. The failure of the anal- ogj-, however, occurs in the disposition of the products. AA''hile ready-made clothing, of what¬ ever grade or quality, may have settled and easilj' defined values, it is not possible to specifj- of building products that resulting sale will in¬ demnify the builder for his outlay or insure to him a profit. The common confusion in the pub¬ lic mind with reference to building costs arises, no doubt, from the blending of the two ideas of cost and A-alue and in a still greater degree from the ignorance -ivhich necessarily prevails with reference to such an intricate and complicated work as building. There has always existed a glamour of mystery and uncertaintj', even in the minds of well-informed persons, as to what are the actual costs of building. The builders them¬ selves have taken no pains to dispel this 'uncer¬ tainty, either through iuability to mastei- the details of their business, or the lack of sufficient education to enable them to combine together in a grand total the \-arious items of cost. Many builders either do not know or pretend to not know, what is the actual cost; and others again wilfully seek to mislead the public mind by claim¬ ing as cost an amount which really includes an exorbitant profit. We believe it would be for the best interests of the buildei-sand of the public if plain and authentic items of cost could be ob¬ tained of a variety of building constructiions. It is common to say that no two t^ibles of costs are alike; that this knowledge c;iu only be gained by experience, and that with private individuals who seek such experience one trial ordinarily suf fices. It is no unusual thing for builders who ha\'e completed their works t6 be assailed by the criticism that such buildings could be produced at a price very much less than that set up as cost. While the value of vacant land may be readily de¬ finable upon some accepted basis, and while the costs claimed.for a good building may be reasona¬ bly and satisfactorily demonstrated; when the two are combined in one proiluct and olfered for sale, in their conipo.site .state, being neither land nor building, but the two united iu one, the ditlicul¬ ties then seem to be niultiplietl of determin¬ ing what may lie the actual aggregate cost. This subject of costs is considered a legitimate enquiry on the part of the house-buying public as a means of determining value, although cost and value are totalh- unrelated and disconnected sums—as buildei-s, through practictil anil painful experience, have learned during tbe pas four yeai-s. The builder depends for realizing his cost^ and any possible profit upon the value which the public ma}' fix upon his completed product at the time it is offered for sale. The value of the builder's product should, in ordinary times, include a reasonable profit, of whicli no honest or fair-minded buyer would seek to deprive him. A fair and iutelligeut exposition of the subject of costs will have its effect in inciting the bu\-ing pub¬ lic to a candid and just interpretation and appre¬ ciation of the builder's product and profit. The misconceptions which usually exi.st in ref¬ erence to this matter may be classified under three headings, in which we propose more con¬ veniently to discuss them. Igiioraid fonJeelKre.—There are many wiseacres and busybodies going about w-ho claim to know ever3'body's business but their own, aud these are usually- the most outspoken and officious in attempting to determine the costs of a given building projection. It is a singular fact that this class of critics, as a rule, seek to underrate such costs, and betray their ignorance in the very statements that they make. When it is claimed that a given building could be produced for a sum of money hardly sufficient to satisfy five or six of the leading and necessary contracts, the con¬ jecture in that case may be set down as both ignorant and false. If these parties purpose to continue their calling as buUding critics, it would be well for them to gather information of the details of building affairs, A superficial knowl¬ edge would enable them to estimate much more correctly than'they do as to real cost. Wilful Mi.'irepre.'sentation.—On the other hand, there are builders and others interested iu main¬ taining the value of property Avho seek to give currency to the idea of enormous costs atttichiiig to this line of work. Personal interest often lies at the bottom of such representations—either the desire to secure an inordinate profit, or tbe piu-- pose.of procuring an excessive [loan on the prop¬ erty. At any rate, the direction of this influence is always one and the same, and that is to undulj- inflate the values of land and building material. This course of procedure is quite as prejudicial as the other, tending to increase the confusion which exists in the public mind, and to deter buj-ers from venturing into the mtirket, through dread of encountering a practical demonstration of these inflated ideas. Discrepant Estimates.—As strange as it may ap¬ pear, it is nevertheless a matter of common ex¬ perience to find several master builders present¬ ing estimates for the same work which vary iu their given totals.from twenty-Jflve .to fifty per cent. This discrepancy may be due to excess or reduction of profit charged, or may be the special measure of individual responsibility assumed by the o;io w-ho makes the caleulati