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An Empirical Analysis of Hedonic Regression and Grid-Adjustment Techniques in Real Estate Appraisal

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  • Han-Bin Kang
  • Alan K. Reichert

Abstract

Multiple regression analysis has become increasingly popular when appraising residential properties for tax purposes. Alternatively, most fee appraisers and real estate brokers use the traditional sales comparison approach. This study combines the two techniques and uses multiple regression to generate the adjustment coefficients used in the grid adjustment method. The study compares the combined grid-regression method with ordinary regression and defines the market conditions under which each method is likely to be more effective. The grid-regression method is found to be more accurate for relatively homogeneous housing markets, and the multiplicative percentage adjustment method (MPAM) the preferred approach. Copyright American Real Estate and Urban Economics Association.

Suggested Citation

  • Han-Bin Kang & Alan K. Reichert, 1991. "An Empirical Analysis of Hedonic Regression and Grid-Adjustment Techniques in Real Estate Appraisal," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 19(1), pages 70-91.
  • Handle: RePEc:bla:reesec:v:19:y:1991:i:1:p:70-91
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    Cited by:

    1. Maurizio d’Amato, 2007. "Comparing Rough Set Theory with Multiple Regression Analysis as Automated Valuation Methodologies," International Real Estate Review, Asian Real Estate Society, vol. 10(2), pages 42-65.
    2. Elena B. Pokryshevskaya & Evgeny A. Antipov, 2011. "Applying a CART-based approach for the diagnostics of mass appraisal models," Economics Bulletin, AccessEcon, vol. 31(3), pages 2521-2528.
    3. Antipov, Evgeny & Pokryshevskaya, Elena, 2010. "Mass appraisal of residential apartments: An application of Random forest for valuation and a CART-based approach for model diagnostics," MPRA Paper 27645, University Library of Munich, Germany.

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