Assessing the Market Value of Real Estate Property with a Geographically Weighted Stochastic Frontier Model

35 Pages Posted: 2 Dec 2008

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.

Suggested Citation

Samaha, Stephen and Kamakura, Wagner A., Assessing the Market Value of Real Estate Property with a Geographically Weighted Stochastic Frontier Model. Real Estate Economics, Vol. 36, Issue 4, pp. 717-751, Winter 2008, Available at SSRN: https://ssrn.com/abstract=1308712 or http://dx.doi.org/10.1111/j.1540-6229.2008.00228.x

Stephen Samaha (Contact Author)

University of Washington ( email )

Seattle, WA 98195
United States

Wagner A. Kamakura

Rice University ( email )

6100 South Main Street
P.O. Box 1892
Houston, TX 77005-1892
United States
(713) 348-6307 (Phone)

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