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Article
Publication date: 1 March 1997

Marvin L. Wolverton

Real estate researchers have suggested that the law of diminishing marginal utility applies not only to consumption of property but to the characteristics of the…

Abstract

Real estate researchers have suggested that the law of diminishing marginal utility applies not only to consumption of property but to the characteristics of the properties consumed as well. Employs a unique data set to empirically model the functional form of the price effects of marginal additions to lot size and view. Shows that the relationships between lot price, size and view are non‐linear, and that marginal price effects diminish as lot size and view quality increase. The results imply that traditional valuation models allow only for the existence of view, rather than the quality of view, and are too simplistic and imprecise. Appraisers should be cognizant of this implication, and devise valuation techniques which allow them to consider differences in the quality of view from property to property.

Details

Journal of Property Valuation and Investment, vol. 15 no. 1
Type: Research Article
ISSN: 0960-2712

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Article
Publication date: 1 August 1997

Paul Gallimore and Marvin Wolverton

Explains that bias in human problem‐solving behaviour may sometimes conflict with the assumptions that underlie normative models of valuation. Possibilities include faulty…

Abstract

Explains that bias in human problem‐solving behaviour may sometimes conflict with the assumptions that underlie normative models of valuation. Possibilities include faulty perceptions of the task, routinized valuation procedures that rely heavily on pending sale price‐knowledge and reliance on innate and distorting problem‐solving heuristics. Describes an experiment conducted with appraisers in the USA and valuers in the UK to investigate the impact of price knowledge on the process of valuation and the search and selection of comparable sales. Concludes that both appraisers and valuers can be subject to price‐knowledge bias, reflected in the choice of the less than “best” comparables and in the actual value estimate. Discusses how cultural differences in the appraisal and valuation processes, especially in the transparency of comparables adjustments, help to explain these effects.

Details

Journal of Property Valuation and Investment, vol. 15 no. 3
Type: Research Article
ISSN: 0960-2712

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