Empirical Investigation into the Limitations of the Normative Paired Sales Adjustment Method

Abstract

This study investigates the normative paired sales adjustment method employed by appraisers in the sales comparison approach. It finds that the method fails to account for the diminishing marginal price effects of property attributes. The study develops an empirical model to test the marginal price effects of view and lot-size amenities. The finding is that the empirical data confirm land economic theory and identify a need to study and develop improved methods for estimating adjustments to comparable sales.