A Longitudinal Examination of the Appraisal Smoothing Hypothesis

Appraisal smoothing, the reduced variability of real estate return series, has been attributed to appraisers being influenced by their own previous value estimates. This hypothesis is tested experimentally. Expert apppraisers from Atlanta were asked to value a hypothetical apartment project in Phoen...

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Bibliographic Details
Published in:Real estate economics 1998-06, Vol.26 (2), p.349-358
Main Authors: Diaz III, Julian, Wolverton, Marvin L.
Format: Article
Language:English
Subjects:
Appraisals
Appraisers
Design
Economics
Estimates
Expected values
Hypotheses
Practice
Problem solving
Property values
Real estate appraisal
Real estate appraisers
Real property
Securities markets
Standard deviation
Studies
Valuation
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Summary:Appraisal smoothing, the reduced variability of real estate return series, has been attributed to appraisers being influenced by their own previous value estimates. This hypothesis is tested experimentally. Expert apppraisers from Atlanta were asked to value a hypothetical apartment project in Phoenix. Eight months later, these experts were asked to update their original appraisals given certain market and property changes. At this time, an independent group of Atlanta experts was asked to appraise the property based on the updated conditions. Results support the hypothesis of insufficient adjustment from previous value judgments.
ISSN:1080-8620
1540-6229
DOI:10.1111/1540-6229.00749