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Valuation Bias in Commercial Appraisal: A Transaction Price Feedback Experiment


  • J. Andrew Hansz
  • Julian Diaz III


Experiments were conducted to test the hypothesis that transaction price feedback may bias valuation judgment. Among participating appraisers, evidence of asymmetrical response was found. The group receiving transaction feedback indicating that current judgments were "too low" responded with judgments in subsequent, unrelated valuations that were significantly higher than the group that received no feedback. The response from "too high" feedback was in the expected direction (lower value judgments) but was not significant. Additionally, valuation dispersion of around 10% revealed in these experiments is consistent with studies of valuation variability and may reflect an upper bound of typical commercial appraisal dispersion. Copyright 2001 by the American Real Estate and Urban Economics Association.

Suggested Citation

  • J. Andrew Hansz & Julian Diaz III, 2001. "Valuation Bias in Commercial Appraisal: A Transaction Price Feedback Experiment," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 29(4), pages 553-565.
  • Handle: RePEc:bla:reesec:v:29:y:2001:i:4:p:553-565

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    Cited by:

    1. Robert Edelstein & Daniel Quan, 2006. "How Does Appraisal Smoothing Bias Real Estate Returns Measurement?," The Journal of Real Estate Finance and Economics, Springer, vol. 32(1), pages 41-60, February.
    2. Pierre-Arnaud Drouhin & Arnaud Simon & Yasmine Essafi, 2016. "Forward Curve Risk Factors Analysis in the UK Real Estate Market," The Journal of Real Estate Finance and Economics, Springer, vol. 53(4), pages 494-526, November.
    3. Yu Liu & Paul Gallimore & Jonathan Wiley, 2015. "Nonlocal Office Investors: Anchored by their Markets and Impaired by their Distance," The Journal of Real Estate Finance and Economics, Springer, vol. 50(1), pages 129-149, January.
    4. repec:kap:jbuset:v:147:y:2018:i:3:d:10.1007_s10551-015-2953-1 is not listed on IDEAS
    5. Drouhin, Pierre-Arnaud, 2012. "Caractéristiques statistiques et dynamique de prix des produits dérivés immobiliers," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/10918 edited by Batsch, Laurent, December.
    6. Philippe Cyrenne & Robert Fenton & Joseph Warbanski, 2006. "Historic Buildings and Rehabilitation Expenditures: A Panel Data Approach," Journal of Real Estate Research, American Real Estate Society, vol. 28(4), pages 349-380.
    7. Diego A. Salzman & Remco C.J. Zwinkels, 2013. "Behavioural Real Estate," Tinbergen Institute Discussion Papers 13-088/IV/DSF58, Tinbergen Institute.

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