In a virtual world, when the house is new, Solomon works flawlessly.
In the real world, as houses age, there is no perfect way to develop market based adjustments. If there was such a method, we would only need one comp, right?
This is why we call Solomon a third way. It is not meant to replace paired sales, in our opinion the best but most elusive option. It is not meant to replace hedonic regression. In fact, Solomon uses regression to extract marginal costs from the data published in cost manuals.
Solomon does provide a fast, repeatable way to measure the reaction to the house being appraised. Like any other measurement, we begin at a point of origin. To measure a house, we hook the tape on the first corner and pull it to the second. With Solomon, we begin with Replacement Cost-New and move to Depreciated Replacement cost.
Is it valid to assign the measured amount of depreciation equally to each cost category? As in most responses to a question about appraisal, it depends. We can affirm that the total is correct, at least to the degree that site value can be estimated. But does a third garage stall depreciate as much as a fireplace? Could the presence of a second bath actually appreciate while other categories decline in appeal to the market? Perhaps.
These are judgments that are left to the appraiser. We offer Solomon as a repeatable, convenient place to start. Especially when sample size or sample match are questionable.