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An Empirical Analysis of Hedonic Regression and Grid‐Adjustment Techniques in Real Estate Appraisal
Author(s) -
Kang HanBin,
Reichert Alan K.
Publication year - 1991
Publication title -
real estate economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.064
H-Index - 61
eISSN - 1540-6229
pISSN - 1080-8620
DOI - 10.1111/1540-6229.00541
Subject(s) - econometrics , regression analysis , real estate , regression , hedonic regression , economics , grid , linear regression , cross sectional regression , multiplicative function , statistics , computer science , actuarial science , mathematics , polynomial regression , finance , mathematical analysis , geometry
Multiple regression analysis has become increasingly popular when appraising residential properties for tax purposes. Alternatively, most fee appraisers and real estate brokers use the traditional sales comparison approach. This study combines the two techniques and uses multiple regression to generate the adjustment coefficients used in the grid adjustment method. The study compares the combined grid‐regression method with ordinary regression and defines the market conditions under which each method is likely to be more effective. The grid‐regression method is found to be more accurate for relatively homogeneous housing markets, and the multiplicative percentage adjustment method (MPAM) the preferred approach.