Assessing the Market Value of Real Estate Property with a Geographically Weighted Stochastic Frontier Model |
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Authors: | Stephen A Samaha Wagner A Kamakura |
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Institution: | 1. University of Washington, Seattle, WA 98195 or ssamaha@u.washington.edu.;2. Duke University, Durham, NC 27708 or kamakura@duke.edu. |
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Abstract: | In this study we consider the problem of sellers, buyers and real estate appraisers in determining the price for a house, taking into account the characteristics of the house and its location as well as the goals of these three different parties. The appraiser's job is to determine the fair market value of the house, while the buyer and seller want to find, respectively, the lowest and highest feasible price for it. We combine recent developments in geography and econometrics to develop an approach that determines local estimates of property values from the perspectives of the buyer, seller and appraiser, taking into account the characteristics of the house as well as its location. We illustrate our approach analyzing closing prices in one residential real estate market. |
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