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Variations in Implementing SCM to Minimize Subjectivity and a Future Direction for Malaysia

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  • Rohana Abdul Rahman

Abstract

The Sales Comparison Method (SCM) is the most widely used method of property va luation, residential properties in particular. With transaction data becoming more and more accessible, the trend will continue. However, SCM is criticized for its subjectivity with inconsistent prediction. The main contributor of subjectivity is informal implementation procedure of the method.Variants of SCM have emerged focusing on implementation details with subjectivity minimized or eliminated. The grid adjustment method has formalized the procedure with optimal or non-optimal route. Spatial autoregressive error model formalized the procedure in addition to estimating the spatial error dependence in a dataset. There are methods that focused on weighting of comparables only. This paper reviews SCM and its variation of implementation, discuss their strengths and weaknesses and recommends modifying the grid adjustment methodas a new implementation procedure of SCM for the country that may minimizes subjectivity.

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  • Rohana Abdul Rahman, 2011. "Variations in Implementing SCM to Minimize Subjectivity and a Future Direction for Malaysia," ERES eres2011_178, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2011_178
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    References listed on IDEAS

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    5. 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.
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    More about this item

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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