Contingent Valuation and Real Estate Damage Estimation

36 Pages Posted: 13 Oct 2011

See all articles by Clifford A. Lipscomb

Clifford A. Lipscomb

Bartow Street Capital LLC; Georgia Institute of Technology

Max Kummerow

affiliation not provided to SSRN

Will Spiess

affiliation not provided to SSRN

Sarah J. Kilpatrick

affiliation not provided to SSRN

John A. Kilpatrick

Greenfield Advisors, LLC

Date Written: October 13, 2011

Abstract

Real estate appraisal practice stresses the three traditional approaches to valuation (cost, sales comparison, and income approaches) to value contaminated properties. This paper discusses the possibility and usefulness of a fourth approach to real estate valuation – the contingent valuation method (CVM).

Developed over several decades mainly in Environmental and Resource Economics as well as Market Research, the CVM is widely applied in benefit-cost analyses. This method is particularly useful in the estimation of losses for contaminated properties when market data are not available or market failure is suspected. Transactions of impaired properties often represent a small sample of all properties under consideration; efficient market assumptions, such as an adequate level of information, are usually not met. In such circumstances, stated values derived from surveys may offer complementary and valid evidence of market value. Where transactional evidence and survey results differ, further analysis of market conditions may be helpful to determine which represents the most credible value conclusion.

Suggested Citation

Lipscomb, Clifford A. and Kummerow, Max and Spiess, Will and Kilpatrick, Sarah J. and Kilpatrick, John A., Contingent Valuation and Real Estate Damage Estimation (October 13, 2011). Journal of Real Estate Literature, Vol. 19, No. 2, 2011, Available at SSRN: https://ssrn.com/abstract=1943460

Clifford A. Lipscomb (Contact Author)

Bartow Street Capital LLC ( email )

106 N. Bartow Street
Cartersville, GA 30120
United States
770-334-3952 (Phone)

Georgia Institute of Technology ( email )

685 Cherry St.
Atlanta, GA 30332-0345
United States

Max Kummerow

affiliation not provided to SSRN ( email )

Will Spiess

affiliation not provided to SSRN ( email )

Sarah J. Kilpatrick

affiliation not provided to SSRN

John A. Kilpatrick

Greenfield Advisors, LLC ( email )

2101 4th Ave
Suite 240
Seattle, WA 98121
United States

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