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Optimal Comparable Weighting and Selection: A Comment

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  • Richard K. Green

Abstract

Vandell (1991) and Gau, et al. (1992) have recently developed rigorous methods for selecting and weighting comparables for the market comparison approach to valuation. This paper compares the statistical properties of the Vandell and Gau approaches; specifically, it examines the bias and variance produced by both approaches. Under classical OLS assumptions, Vandell's method is preferable; when these assumptions are violated, the size and direction of the violation will determine which method is preferable. Finally, the paper concludes that when the regression producing the adjustment factors has an heteroskedastic error structure, corrections should be made to the regression itself, rather than as part of the comparable weighting and selection process.

Suggested Citation

  • Richard K. Green, 1994. "Optimal Comparable Weighting and Selection: A Comment," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 22(4), pages 647-654, December.
    • Handle: RePEc:bla:reesec:v:22:y:1994:i:4:p:647-654
    DOI: 10.1111/1540-6229.00653
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    Cited by:

    1. James A. Bryant & Donald R. Epley, 1998. "Cancerphobia: Electromagnetic Fields and Their Impact on Residential Loan Values," Journal of Real Estate Research, American Real Estate Society, vol. 15(1), pages 115-129.
    2. R. Kelley Pace, 1998. "Total Grid Estimation," Journal of Real Estate Research, American Real Estate Society, vol. 15(1), pages 101-114.
    3. George H. Lentz & Ko Wang, 1998. "Residential Appraisal and the Lending Process: A Survey of Issues," Journal of Real Estate Research, American Real Estate Society, vol. 15(1), pages 11-40.
    4. Copiello Sergio & Cecchinato Filippo & Salih Mohammed Haj, 2021. "The Effect of Hybrid Attributes on Property Prices," Real Estate Management and Valuation, Sciendo, vol. 29(4), pages 36-52, December.
    5. Donald R. Epley, 1997. "A Note on the Optimal Selection and Weighting of Comparable Properties," Journal of Real Estate Research, American Real Estate Society, vol. 14(2), pages 175-182.
    6. Eriksen, Michael D. & Fout, Hamilton B. & Palim, Mark & Rosenblatt, Eric, 2019. "The influence of contract prices and relationships on appraisal bias," Journal of Urban Economics, Elsevier, vol. 111(C), pages 132-143.

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