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How Appraisers Do Their Work: A Test of the Appraisal Process and the Development of a Descriptive Model

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Abstract

Actual decisionmaking behavior is rarely the focus of real estate valuation research, but this paper argues the need for just such investigations and reports the results of one study. Two hypotheses concerning the relationship between the appraisal process and the actual behavior of expert appraisers are developed. An experimental test of these hypotheses reveals evidence that the behavior of expert appraisers deviates significantly from the prescribed appraisal process. Based upon the experimental observations, a model of actual expert behavior is built and compared to the prescribed model. Some implications of the observed behavioral divergence are discussed.

Suggested Citation

  • Julian Diaz III, 1990. "How Appraisers Do Their Work: A Test of the Appraisal Process and the Development of a Descriptive Model," Journal of Real Estate Research, American Real Estate Society, vol. 5(1), pages 1-16.
    • Handle: RePEc:jre:issued:v:5:n:1:1990:p:1-16
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    Cited by:

    1. Diego Salzman, 2013. "Behavioural Real Estate," ERES eres2013_334, European Real Estate Society (ERES).
    2. Isler, Ozan & Flew, Terry & Erol, Isil & Dulleck, Uwe, 2021. "Market news and credibility cues improve house price predictions: An experiment on bounded rationality in real estate," Journal of Behavioral and Experimental Finance, Elsevier, vol. 31(C).
    3. William G. Hardin & Xiaoquan Jiang & Zhonghua Wu, 2017. "Inflation Illusion, Expertise and Commercial Real Estate," The Journal of Real Estate Finance and Economics, Springer, vol. 55(3), pages 345-369, October.
    4. Patrick Krieger & Carsten Lausberg, 2021. "Entscheidungen, Entscheidungsfindung und Entscheidungsunterstützung in der Immobilienwirtschaft: Eine systematische Literaturübersicht [Decisions, decision-making and decisions support systems in r," Zeitschrift für Immobilienökonomie (German Journal of Real Estate Research), Springer;Gesellschaft für Immobilienwirtschaftliche Forschung e. V., vol. 7(1), pages 1-33, April.
    5. Alm, James & Leguizamon, J. Sebastian, 2018. "The housing crisis, foreclosures, and local tax revenues," Regional Science and Urban Economics, Elsevier, vol. 70(C), pages 300-311.
    6. Paul Gallimore & Marvin Wolverton, 2000. "The objective in valuation: a study of the influence of client feedback," Journal of Property Research, Taylor & Francis Journals, vol. 17(1), pages 47-57, January.
    7. Hsueh-Fei Liao & Nan-Yu Chu & Chien-Wen Peng, 2018. "Awareness of Independence of Real Estate Appraisers: An Empirical Analysis," International Real Estate Review, Global Social Science Institute, vol. 21(3), pages 295-316.
    8. Marvin Wolverton & Paul Gallimore, 1999. "Client Feedback and the Role of the Appraiser," Journal of Real Estate Research, Taylor & Francis Journals, vol. 18(3), pages 415-431, January.
    9. Alm, James & Buschman, Robert D. & Sjoquist, David L., 2014. "Foreclosures and local government revenues from the property tax: The case of Georgia school districts," Regional Science and Urban Economics, Elsevier, vol. 46(C), pages 1-11.
    10. Konowalczuk Jan, 2017. "The Problem of Reflecting the Market in the Legal Principles of Real Estate Valuation in Poland. How to Eliminate the “Legal Footprint”?," Real Estate Management and Valuation, Sciendo, vol. 25(2), pages 44-57, June.
    11. Alm, James & Buschman, Robert D. & Sjoquist, David L., 2011. "Rethinking local government reliance on the property tax," Regional Science and Urban Economics, Elsevier, vol. 41(4), pages 320-331, July.
    12. 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.
    13. Diego A. Salzman & Remco C.J. Zwinkels, 2013. "Behavioural Real Estate," Tinbergen Institute Discussion Papers 13-088/IV/DSF58, Tinbergen Institute.
    14. James Alm & Robert D. Buschman & David L. Sjoquist, 2013. "How did foreclosures affect property values in Georgia School Districts?," Working Papers 1308, Tulane University, Department of Economics.

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    JEL classification:

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

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