Quantitative Methods in Real Estate Mass Appraisal

Abstract

Proposed introduction of the ad valorem tax on the real estate market makes it necessary to perform mass appraisal of the real estates. The goal of the chapter was verification of usefulness of econometric and statistical methods in the mass appraisal process. Exponential econometric model and partial τB Kendall correlation coefficients were applied to identify the impact of attributes and location on unit real estate price. The so-called Szczecin algorithm of real estate mass appraisal was the basis in both econometric and statistical approach. Accuracy of both approaches was checked by means of percentage error (PE) and mean absolute percentage error (MAPE) distributions. Real database containing information about 113 transactions with undeveloped land for housing purposes in Szczecin was used. The research results suggest that both methods can be used for real estate mass appraisal; however, the econometric approach gave slightly better results.