A density function of the appraisal value. Calculation and evaluation of the empirical density function of the appraisal value based on comparison method, spatial correlation techniques, resampling methods, compliant with the Spanish legal framework

The objective of this paper is the presentation of a methodology for calculating and evaluating the empiric probability function of the market value for a defined property. As it is commonly known 'The value of an object is not unique' (Roca, 1986), but is defined by its distribution function. Design/methodology/approach ñ The tools necessary to develop this project were: the expert methods theory, accurate information in the area of construction techniques, statistical resampling methods, spatial correlation and regression methods, the study of the empirical distribution functions and the statistics which define the distribution functions, GIS tools, the hedonic functions, simulation methods, discriminant methods and the studies of legal procedures related to the valuation studies process. Findings - Thanks to nowadays computation methods it has been possible to achieve a representation of the market value of a property by taking into consideration the information on the set of samples. The empirical distribution is not only the image of the behavior of the value; it is an indicator of the quality and the effectiveness of the solution and an indicator of the complexity of the evaluated zone. Based on this concept, it is possible to decide based on the statistical definition of the distribution curve, how and where the solution obtained could be employed. The statistical method of analysis of spatial correlation can be of great utility in the property valuation world, but a previous technical procedure is necessary to guarantee the quality of data. Practical implications - The hybrid AVM presented in this paper can be a tool of enormous help, not only for the valuation entities in their individual valuation procedures, but also for institutions that aim to perform mass valuations. Originality /value - It is a high quality solution that can provide substantial assistance to those officials responsible for conducting the mass valuation processes required by BASEL II and III. It can also be employed as an auditing tool for legal frameworks like BASEL II and III and also for the everyday valuation processes performed within a company when the results of the valuation arise from different providers.