Evaluating Real Estate Valuation Systems

Journal of Real Estate Finance And Economics, Vol. 18, No. 2

Posted: 5 Jun 1998

See all articles by Robert J. Shiller

Robert J. Shiller

Yale University - Cowles Foundation; National Bureau of Economic Research (NBER); Yale University - International Center for Finance

Allan N. Weiss

Case Shiller Weiss Inc.

Abstract

A framework for comparing real estate valuation systems (including comparing purely statistical valuation systems with current appraisal methods) is proposed. The Density Estimation and Profit Simulation (DEPS) Method measures quality of a valuation system by simulating benefits to the mortgage lender who uses this method in mortgage underwriting to limit mortgage portfolio losses due to default. Related simple measures relevant to the selection of a valuation system are also discussed: skewness of the distribution of errors, correlation of valuation errors with current selling price errors, correlation of errors of the valuation system with errors of valuation systems used by competing mortgage lenders, and other measures.

JEL Classification: R0

Suggested Citation

Shiller, Robert J. and Weiss, Allan N., Evaluating Real Estate Valuation Systems. Journal of Real Estate Finance And Economics, Vol. 18, No. 2, Available at SSRN: https://ssrn.com/abstract=95868

Robert J. Shiller (Contact Author)

Yale University - Cowles Foundation ( email )

Box 208281
New Haven, CT 06520-8281
United States
203-432-3708 (Phone)
203-432-6167 (Fax)

HOME PAGE: http://www.econ.yale.edu/~shiller/

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States
203-432-3708 (Phone)

Yale University - International Center for Finance ( email )

Box 208200
New Haven, CT 06520
United States
203-432-3708 (Phone)
203-432-6167 (Fax)

Allan N. Weiss

Case Shiller Weiss Inc. ( email )

1698 Massachusetts Ave.
Cambridge, MA 02138
United States
617-354-1400 (Phone)
617-498-0959 (Fax)

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