An Empirical Analysis of the Reliability and Precision of the Cost Approach in Residential Appraisal

Mark G. Dotzour ()
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Mark G. Dotzour: Department of Finance, Real Estate and Decision Sciences The Wichita State University Wichita, Kansas 67208-1595, http://www.twsu.edu/~finance/

Journal of Real Estate Research, 1990, vol. 5, issue 1, 67-74

Abstract: Many articles and books have discussed the limitations of the cost approach to estimate market value or real estate. This article is the first to empirically measure the predictive ability of the cost approach to estimate value of single-family houses. Three hypotheses have been tested. The results indicate that the cost approach did not provide unbiased estimates of value, and the sales comparison approach estimated value more precisely. Additionally, cost approach precision was not significantly different for newer or older properties.

JEL-codes: L85 (search for similar items in EconPapers)
Date: 1990
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Citations: View citations in EconPapers (2)

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