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Valuation accuracy and variation: a meta analysis

Skitmore, Martin, Irons, Janine, & Armitage, Lynne (2007) Valuation accuracy and variation: a meta analysis. In 13th Pacific Rim Real Estate Society Conference, 21-4 January 2007, Fremantle, WA..

Abstract

This paper provides a first order approximation of the accuracy of commercial property valuations for comparison with the ±5-10% threshold of tradition, convention and judicial acceptance. The nature of ranges is considered in relation to the uniform and normal probability density functions and the effects of bias considered. Summary statistics are examined for gross differences (differences between property valuations and subsequently realised transaction prices) recorded in the Investment Property Databank (IPD) database and significant yearly changes noted in both the means and standard deviations. A meta analysis of previous work is presented which shows all other results involving gross differences (GDs) to be reasonably consistent with statistics yielded by the IPD database. The results for the two main studies of net differences (GDs adjusted for the lag in time between valuation and transaction dates) also suggest yearly trends of a similar nature to the GDs. The role of intravaluer variability is also examined. The variability associated with the time lag is then estimated and applied to the IPD figures to give the approximation sought, suggesting ±5-30% to be a realistic range in place of ±5-10%.

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ID Code: 9485
Item Type: Conference Paper
Additional Information: The contents of this conference can be freely accessed online via the publisher’s web page (see hypertext link).
Additional URLs:
Subjects: Australian and New Zealand Standard Research Classification > BUILT ENVIRONMENT AND DESIGN (120000) > OTHER BUILT ENVIRONMENT AND DESIGN (129900) > Built Environment and Design not elsewhere classified (129999)
Divisions: Past > QUT Faculties & Divisions > Faculty of Built Environment and Engineering
Copyright Owner: Copyright 2007 (please consult author)
Deposited On: 13 Sep 2007
Last Modified: 29 Feb 2012 23:39

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