Quantifying Estimation Bias in Residential Appraisal

The purpose of this study was to empirically test the ability of residential appraisers to estimate market value of houses. Using a sample of over 500 appraisals made for corporate relocation firms, the appraisal estimates of market value were compared with the actual price that the houses sold for subsequently. The results indicate that current appraisal methods produce unbiased estimates of market value. Additional empirical results are presented that show that seasonal factors and regional economic conditions significantly explain variation in appraisal error.