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A Longitudinal Examination of the Appraisal Smoothing Hypothesis
Author(s) -
Diaz Julian,
Wolverton Marvin L.
Publication year - 1998
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 - 10.1111/1540-6229.00749
Subject(s) - atlanta , real estate , actuarial science , value (mathematics) , property (philosophy) , economics , property value , apartment , psychology , smoothing , econometrics , mathematics , finance , statistics , medicine , engineering , epistemology , philosophy , civil engineering , metropolitan area , pathology
Appraisal smoothing, the reduced variability of real estate return series, has been attributed to appraisers being influenced by their own previous value estimates. This hypothesis is tested experimentally. Expert apppraisers from Atlanta were asked to value a hypothetical apartment project in Phoenix. Eight months later, these experts were asked to update their original appraisals given certain market and property changes. At this time, an independent group of Atlanta experts was asked to appraise the property based on the updated conditions. Results support the hypothesis of insufficient adjustment from previous value judgments.