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A Note on the Optimal Selection and Weighting of Comparable Properties

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Abstract

This paper reexamines the recommendation by Vandell (1991), Gau, Lai and Wang (1992, 1994) and Green (1994) for the use of the minimum variance and coefficient of variation criteria in the optimum selection of comparables. These authors under-emphasize the typical valuation scenario that involves extremely small samples. The analyst must rank the few available comparable properties and select the "best" to carry the most weight in the final estimate of value. Rank transformation regression is suggested as one approach that can be used to extract the buying trend. The commonly taught paired-sale analysis will remain as the industry tool until more accurate estimates of value are developed with small samples.

Suggested Citation

  • 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.
    • Handle: RePEc:jre:issued:v:14:n:2:1997:p:175-182
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    References listed on IDEAS

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    1. George W. Gau & Tsong‐Yue Lai & Ko Wang, 1992. "Optimal Comparable Selection and Weighting in Real Property Valuation: An Extension," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 20(1), pages 107-123, March.
    2. Thomas Hettmansperger & Joseph McKean, 1978. "Statistical inference based on ranks," Psychometrika, Springer;The Psychometric Society, vol. 43(1), pages 69-79, March.
    3. 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.
    4. Ben-Akiva, Moshe & Morikawa, Takayuki & Shiroishi, Fumiaki, 1992. "Analysis of the reliability of preference ranking data," Journal of Business Research, Elsevier, vol. 24(2), pages 149-164, March.
    5. Kerry D. Vandell, 1991. "Optimal Comparable Selection and Weighting in Real Property Valuation," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 19(2), pages 213-239, June.
    6. Stephen E. Celec, 1982. "Incorrect Preference Orderings With The Coefficient Of Variation," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 5(1), pages 69-73, March.
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    Cited by:

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    2. Mei-Hsing Lee & Chien-Wen Peng & Hsueh-Fei Liao, 2020. "An Analysis of Objectivity in the Real Estate Appraisal Process," International Real Estate Review, Global Social Science Institute, vol. 23(4), pages 483-504.

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    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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