The influence of contract prices and relationships on appraisal bias

Eriksen, Michael D.; Fout, Hamilton B.; Palim, Mark; Rosenblatt, Eric

doi:10.1016/j.jue.2019.04.007

Cited by 16 publications

(9 citation statements)

References 16 publications

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“…For instance, comparables based on past sales or rents frame as direct or indirect sources of information in all techniques employed predictions, appraisal and valuation (IAAO, 2018). Eriksen et al (2019) stress how the appraisal bias of residential property played a key role in the 2008 Global Financial Crisis and subsequent recession, identifying comparable selection to be the primary source of this bias. A limited time horizon of past price information can be a key change during extreme shocks (Dubé et al 2018), implying pre-pandemic comparables might not be a significant source of information.…”

Section: The World Of Real Estate Investmentmentioning

confidence: 95%

Imagining a post-COVID-19 world of real estate

Carson

Nanda

Thanos

et al. 2021

Town Planning Review

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The Covid-19 pandemic has triggered abrupt and enduring changes in almost every aspects of our life, society and economy. Although the real estate sector is generally slow to adjust and evolve, this pandemic is causing swift, far-reaching consequences for the sector. Changes are likely to be widespread, encompassing all sub-sectors of the industry. While the situation is still fluid and full spectrum of the impact of it is yet to unfold, we put forward some thoughts about those changes and speculate on the trends that may shape how the sector would look like in the post-Covid-19 world.

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Section: The World Of Real Estate Investmentmentioning

confidence: 95%

Imagining a post-COVID-19 world of real estate

Carson

Nanda

Thanos

et al. 2021

Town Planning Review

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“…More troubling is that conflicts of interest can also arise. This point is made forcefully by Eriksen et al (2019):…”

Section: Appraisal-based Indices and Indicatorsmentioning

confidence: 99%

Commercial Property Price Indices and Indicators: Review and Discussion of Issues Raised in the CPPI Statistical Report of Eurostat (2017)

Hill

Steurer

2020

Review of Income and Wealth

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“…Eriksen et al. (2019) argue that appraisers use subjective weighting schemes to increase appraised values. In our context, this provides some evidence that appraisers may use subjective weighting to counteract low sales prices of distressed comps.…”

Section: Datamentioning

confidence: 99%

“…As Eriksen et al. (2019) point out, an equally weighted value estimate is, in the absence of other information, the least biased estimator, and deviations from that may reflect appraisal bias. Indeed, Eriksen et al.…”

Section: Distress and The Appraiser's Weighting Schemementioning

confidence: 99%

Distressed comps

Conklin

Coulson

Diop

2022

Real Estate Economics

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We consider the use and impact of distressed properties as comparables in residential appraisals. First, we describe the incidence of their use and their relative comparability; second, we estimate their impact on the appraisal value itself; and third, we consider their impact on the probability that the appraisal is below the proposed transaction price. We find, generally, that distressed comps are largely good matches to their subject properties, which suggests that they are not necessarily used as a last resort. We find that they are not a drag on appraised value because appraisers learn to make the right adjustments over time. The use of distressed comps is associated with a higher probability of a belowprice appraisal due to the increased spread of appraisals around the contract price, particularly for higher priced homes. Overall, the use of distressed comps increased the uncertainty in the valuation process, but appraisers learned the appropriate adjustments over time. INTRODUCTIONAccurate appraisals are important to the transfer of property. Real property, such as single-family homes, are traded infrequently, and given the heterogeneity of each unit (as embodied in the property's unique set of characteristics), no immediate evaluation is available, as there would be for more homogeneous products. Appraisals are particularly important to the suppliers of mortgage credit. Without credit, most homebuyers would not be able to finance or refinance a home purchase, but the lender's underwriting standards generally require that an independent appraisal be performed, and this appraisal is crucial to the extension of credit to the purchaser. To obtain

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The influence of contract prices and relationships on appraisal bias

Cited by 16 publications

References 16 publications

Imagining a post-COVID-19 world of real estate

Imagining a post-COVID-19 world of real estate

Commercial Property Price Indices and Indicators: Review and Discussion of Issues Raised in the CPPI Statistical Report of Eurostat (2017)

Distressed comps

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