Real estate valuation according to standardized methods: An empirical analysis
AbstractAppraisals are needed for decision-making and for performance evaluation. Knowledge on the accuracy of valuation methods is of general interest for banks and investors. We assess the accuracy of the German Regulation on Valuation with monthly data on appraisals and prices for commercial apartment houses in Berlin, Germany from 1980 to 2000. The appraisals are compared with outcomes of the simpler capitalization method and are ranked better according to several prediction error measures. Nonparametric density estimates give the error distributions and investors can decide which method is preferable. Eventually, we explain short-run deviations between prices and appraisals by incompletely appraised object-specific factors and by market indicators. --
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Bibliographic InfoPaper provided by Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes in its series SFB 373 Discussion Papers with number 2002,55.
Date of creation: 2002
Date of revision:
Appraisal Accuracy; Discounted Value; House Prices; State Space Model;
Find related papers by JEL classification:
- G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
- K00 - Law and Economics - - General - - - General (including Data Sources and Description)
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