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Comparing the Accuracy of the Minimum‐Variance Grid Method to Multiple Regression in Appraised Value Estimates

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  • Tsong‐Yue Lai
  • Ko Wang

Abstract

The adjustment‐grid method and the multiple‐regression method are the two most frequently used techniques in the sales comparison approach. This paper demonstrates that although both techniques provide unbiased estimators, the minimum‐variance grid estimator should result in a smaller standard deviation than the multiple‐regression estimator. A technique is also derived to estimate the confidence interval or to perform hypothesis tests for the minimum‐variance grid estimator.

Suggested Citation

  • Tsong‐Yue Lai & Ko Wang, 1996. "Comparing the Accuracy of the Minimum‐Variance Grid Method to Multiple Regression in Appraised Value Estimates," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 24(4), pages 531-549, December.
    • Handle: RePEc:bla:reesec:v:24:y:1996:i:4:p:531-549
    DOI: 10.1111/1540-6229.00703
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    Cited by:

    1. George H. Lentz & Ko Wang, 1998. "Residential Appraisal and the Lending Process: A Survey of Issues," Journal of Real Estate Research, American Real Estate Society, vol. 15(1), pages 11-40.
    2. Sam K. Hui & Alvin Cheung & Jimmy Pang, 2010. "A Hierarchical Bayesian Approach for Residential Property Valuation:Application to Hong Kong Housing Market," International Real Estate Review, Global Social Science Institute, vol. 13(1), pages 1-29.
    3. Antonio Nesticò & Marianna La Marca, 2020. "Urban Real Estate Values and Ecosystem Disservices: An Estimate Model Based on Regression Analysis," Sustainability, MDPI, vol. 12(16), pages 1-15, August.
    4. 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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