Author: Richard A. Graff and Michael S. Young

Start Page: 33
End Page: 54
Volume: 17
Issue Number: 1
Year: 1999
Publication: Journal of Real Estate Research

Abstract: Analysis of more than seven hundred pairs of simultaneous independent appraisals of institutional-grade commercial properties shows that the standard deviation of the random component of appraisal error is approximately 2%. Random appraisal error appears constant across both time and the institutional-grade investment universe, except during infrequent periods of real estate market gridlock. Most appraisal error is deterministic in nature, even though it usually appears random in routine cross-sectional analysis. Such appraisal error can be constrained and reduced by investment management control systems.