The Magnitude of Random Appraisal Error in Commercial Real Estate Valuation
1999; Taylor & Francis; Volume: 17; Issue: 1 Linguagem: Inglês
10.1080/10835547.1999.12090966
ISSN2691-1175
AutoresRichard A. Graff, Michael Young,
Tópico(s)Urban Planning and Valuation
ResumoAnalysis of more than seven hundred pairs of simultaneous independent appraisals of institutional-grade commercial properties shows that the standard deviation of the random component of appraisal error is approximately 2%. Random appraisal error appears constant across both time and the institutional-grade investment universe, except during infrequent periods of real estate market gridlock. Most appraisal error is deterministic in nature, even though it usually appears random in routine cross-sectional analysis. Such appraisal error can be constrained and reduced by investment management control systems.
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