Reducing the Appraisal Bias in Manual Valuations with Decision Support Systems

Lausberg, Carsten; Dust, Anja

doi:10.1007/978-3-319-49746-4_18

Cited by 6 publications

(35 citation statements)

References 28 publications

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“…Contrary to the findings of George et al (2000), recent empirical studies by Tidwell and Gallimore (2014), and Lausberg and Dust (2017) show that a decision-support tool can be effective in debiasing valuation judgement. Tidwell and Gallimore (2014) use an existing proprietary tool, CoStar 1 , to examine the efficacy of decision-support tools in debiasing valuation judgements of industrial vacant land.…”

Section: Use Of Decision-support Tools For Real Estate Valuationsmentioning

confidence: 59%

“…These included the works of Northcraft and Neale (1987) and Diaz et al (1999). In the case of George et al (2000), Tidwell and Gallimore (2014), and Lausberg and Dust (2017), computer systems were used for the experiments. The three studies used different anchors: the asking or listing price (George et al, 2000), the previous value judgement of an anonymous expert (Tidwell & Gallimore, 2014), and the book value of the property (Lausberg & Dust, 2017).…”

Section: The Experimental Methodsmentioning

confidence: 99%

“…The DSS version produced more accurate market values with fewer dispersed results than the standard and modified versions. Lausberg and Dust (2017) assert that variability is reduced because users are required to follow normative procedures and are forced to spend more time on decision-making. In fact, with the requirement to compare market data sources, readings and data input to make a rational opinion, it is observed that processing time is longer with the DSS version.…”

Section: Use Of Decision-support Tools For Real Estate Valuationsmentioning

confidence: 99%

“…On the other hand, the results were less convincing using only the modified version; the frequency distribution graph shows a distribution with outliers. While Lausberg and Dust (2017) presume that the warning message may not have been explicit enough or may have caused confusion, a similar study by George et al (2000) shows that use of a warning message only is not sufficient to address the anchoring effects.…”

Section: Use Of Decision-support Tools For Real Estate Valuationsmentioning

confidence: 99%

“…With an improved informational display, informational search and reduced processing cost, DSS provide a cognitive incentive system that both enhances the decision-making process and reduces systematic bias. Tidwell and Gallimore (2014) and Lausberg and Dust (2017) found that decision-support technology has the potential to reduce the most prominent bias in real estate valuations: the anchoring bias. While the studies revealed the existence of anchor behaviour, they also showed that computer-based systems can be used to improve appraisal judgement, although many issues remain unresolved.…”

Section: Introductionmentioning

confidence: 99%

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Reducing the property appraisal bias with decision support systems: An experimental investigation in the South African property market

Evans

Lausberg²,

Jesse³

2019

JARER

Self Cite

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Background-Researchers have observed that valuation accuracy and valuation variation are caused by human adaptive approaches called cognitive shortcuts. Of particular interest for valuation tasks is the susceptibility of decision-makers to the anchoring and adjustment heuristic, a mental shortcut which involves deliberate and conscious adjustment of values. Various studies have shown that valuers are prone to anchoring to asking price, previous estimates, and other reference points. Aim-The research aim is to determine the efficacy of a decision-support tool in reducing property appraisal bias. Setting and Methods-A controlled experimental study design was used. The design in which test persons had to appraise a fictitious property is based on a German study that uses a selfwritten valuation software, adapted to South African conditions. The software comprises two versions, a standard software and a decision-support software. Descriptive statistics and nonparametric testing were used to interpret the results. Findings-Despite the results not being as robust as expected, the study revealed that test subjects were susceptible to the anchoring bias and that using a decision-support tool can help reduce this and so decrease the valuation variations. Practical implications-This study heightened the need to counter the effect of bias in valuation. Few studies have delved into debiasing methods and even fewer have used technical tools for this task. Other forms of cognitive shortcuts used by valuers should be incorporated into the decision-support tool, and a similar test run for different valuation settings.

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Section: Use Of Decision-support Tools For Real Estate Valuationsmentioning

confidence: 59%

Section: The Experimental Methodsmentioning

confidence: 99%

Section: Use Of Decision-support Tools For Real Estate Valuationsmentioning

confidence: 99%

Section: Use Of Decision-support Tools For Real Estate Valuationsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Reducing the property appraisal bias with decision support systems: An experimental investigation in the South African property market

Evans

Lausberg²,

Jesse³

2019

JARER

Self Cite

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Supporting property valuation with automatic reconciliation

d’Amato

2018

JERER

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Purpose Valuation is a professional activity based on international and local standards. In the valuation process more than one method can be modified. In this case, a final reconciliation of different opinions of value may be required. It is a matter of fact that the final result of these different valuation methods may vary. Therefore, in the final part of the valuation process, the valuer is required to assign a weight to the different methodologies to reach an appropriate opinion of value. This process is essentially based on valuer’s expertise. This paper aims to propose an automatic procedure of calculating the weights to assist the valuer in the valuation process. Design/methodology/approach The work provides methodologies to assign the weights through simple mathematical procedures that can be used to support subjective judgement in the valuation process. The models proposed can be applied to other phases of reconciliation inside the valuation process and are based on the collection of previous property data in the same market segment. Findings Two different methodologies are proposed to support valuers in the valuation process and in particular in the phase of the choice of the weights for final reconciliation purposes. Research limitations/implications The implication is the development of an information system to support the appraiser in providing these weights. The models proposed are only two but represent a future, much larger field of research. Practical implications The models may help in determining more consistent valuation reports. Social implications Consistent valuation reports for the determination of mortgage lending value may contribute to the stability of the social and economic system, especially after the 2008 non-agency mortgage crisis. Originality/value These are original models proposed in literature for such kind of problems.

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Approaches to improving valuation decision-making: a review of the literature

Liman,

Amidu,

Levy

2024

JPIF

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PurposeThe complexity of property valuation, coupled with valuers’ cognitive limitations, makes some degree of error inevitable in valuations. However, given the crucial role that valuations play in the efficient functioning of the economy, there is a need for continuous improvement in the reliability of reported values by enhancing the quality of the decision-making process. The purpose of this paper is to review previous research on valuation decision-making, with particular interest in examining the approaches to improving the quality of valuation decisions and identifying potential areas for further research.Design/methodology/approachThe paper adopts a narrative approach to review 42 research articles that were obtained from Scopus and Web of Science databases and through author citation searches.FindingsOur findings show that existing literature is skewed towards examining the use of technology in the form of decision support systems (DSS), with limited research attention on non-technological (i.e. behavioural) approaches to improving the quality of valuation decisions. We summarise the non-technological approaches and note that much of the discussions on these approaches often appear as recommendations arising from other studies rather than original investigations in their own rights.Practical implicationsWe conclude that studies investigating the effectiveness of the non-technological approaches to improving valuation decision-making are lacking, providing various avenues for further research.Originality/valueThis paper presents the first attempt to provide a comprehensive overview of non-technological approaches to improving the quality of valuation decisions.

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Reducing the Appraisal Bias in Manual Valuations with Decision Support Systems

Cited by 6 publications

References 28 publications

Reducing the property appraisal bias with decision support systems: An experimental investigation in the South African property market

Reducing the property appraisal bias with decision support systems: An experimental investigation in the South African property market

Supporting property valuation with automatic reconciliation

Approaches to improving valuation decision-making: a review of the literature

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