ADJUSTMENT VALUATION WITH A MULTIPLE CRITERIA ANALYSIS METHOD

Paolo Damian, Salvatore Greco () and Paolo Rosato

ERES from European Real Estate Society (ERES)

Abstract: Sales Comparison Approach (SCA) is the most popular method for property valuation, both in Europe and North America. The approach is based on principle of substitution and on the assumption that market price, which represent buyers and sellers behaviour in the market, is a good market value indicator. The procedure most frequently used in SCA is Adjustment Grid Method (AGM). The AGM consist in several steps, the first is selecting a group of comparables property which have been sold recently and present similar characteristic to the property being appraised, called subject. The second is choosing the variables that affect the market value and evaluating the difference between comparables and subject. Then monetary adjustment to the sale price of the comparables are estimated in order to represent what it would have sold for had it been identical to the subject. Finally the market value of subject is inferred from adjusted price of comparables. One of the major difficult of the AGM is the estimate of the adjustments factors. This article proposes a multiple criteria approach called UTilitËs Additives (UTA), for the valuation of the adjustment factors. The application of UTA on a database of property sales proves the capacity of the method to provide more reliable adjustment estimation then usual regression method.

JEL-codes: R3 (search for similar items in EconPapers)
Date: 2010-01-01
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