Housing valuation model: an investigation of residential properties in Tehran

Purpose - Lack of a consistent standardized housing pricing system in Iran has led housing valuation to become solely dependent on appraisers' opinions. The purpose of this paper is to investigate some behavioral aspects of real estate decision makers, i.e. buyers and appraisers.Design methodology approach - First, and based on a content analysis of the valuation literature, a preliminary housing valuation model is proposed. This model is then contextualized and tested on two separate samples of 23 appraisers and 145 buyers, using interviewing technique and self-administered questionnaires.Findings - This study shows that buyers and appraisers may have different views about property valuation and that the appraisal process of residential housing in Iran contains substantial inconsistency with respect to buyers' needs. In addition, it was found that financial status is a significant factor affecting buyers' attitude toward housing valuation.Research limitations implications - The findings may shed greater light on understanding behavioral aspects of the valuation process, in general, and the importance of individual differences, in particular, that could be applicable to different markets or different types of properties.Practical implications - The model developed in this study could be used by both appraisers, as a guideline in valuation process, and buyers, as a check-list of attributes they choose to consider in the decision-making process. It could also be used by policy makers, banks and other financial institution providing mortgage loans, and real estate agencies, to name a few.Originality value - The lack of conformity between buyers and appraisers on property valuation may result in buyers paying a higher price for amenities that may not be considered crucial from their perspectives. As a result, this study reveals the necessity of creating an integrated appraisal system based on customer needs. This housing valuation model is the first and most comprehensive framework developed and contextualized for the Tehran housing market. In addition, this study is one of the few studies examining both demand- and supply-sides of the housing market simultaneously.