Real Estate Appraisal: a Review of Valuation Methods

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PRACTICE BRIEFING

Real estate appraisal: a review of valuation methods
School of Electrical and Computer Engineering, National Technical University of Athens, Athens, Greece School of Rural and Surveying Engineering, National Technical University of Athens, Athens, Greece, and Jonathan Edwards Consulting, University of Reading, UK
Keywords Market surveys, Real estate, Forecasting, Estimation, Assets valuation Abstract The valuation of real estate is a central tenet for all businesses. Land and property are factors of production and, as with any other asset, the value of the land flows from the use to which it is put, and that in turn is dependent upon the demand (and supply) for the product that is produced. Valuation, in its simplest form, is the determination of the amount for which the property will transact on a particular date. However, there is a wide range of purposes for which valuations are required. These range from valuations for purchase and sale, transfer, tax assessment, expropriation, inheritance or estate settlement, investment and financing. The objective of the paper is to provide a brief overview of the methods used in real estate valuation. Valuation methods can be grouped as traditional and advanced. The traditional methods are regression models, comparable, cost, income, profit and contractor 's method. The advanced methods are ANNs, hedonic pricing method, spatial analysis methods, fuzzy logic and ARIMA models.

Practice briefing: Real estate appraisal 383

Elli Pagourtzi and Vassilis Assimakopoulos Thomas Hatzichristos

Nick French

Introduction Real property is defined as all the interests, benefits, rights and encumbrances inherent in the ownership of physical real estate, where real estate is the

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