Alternative procedure of sales comparison method in valuing property

The Sales Comparison Method (SCM) is the most widely used method of property valuation; particularly for residential properties. With transaction data becoming more and more accessible, the trend of using Comparison Method will continue; the valuation of commercial properties is expected to also use...

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Main Author:	Abdul Rahman, Rohana
Format:	Thesis
Language:	English
Published:	2013
Subjects:	Computational intelligence Intelligence control systems
Online Access:	http://psasir.upm.edu.my/id/eprint/47866/1/FK%202013%2027R.pdf
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spelling	my-upm-ir.478662016-10-20T04:13:03Z Alternative procedure of sales comparison method in valuing property 2013-12 Abdul Rahman, Rohana The Sales Comparison Method (SCM) is the most widely used method of property valuation; particularly for residential properties. With transaction data becoming more and more accessible, the trend of using Comparison Method will continue; the valuation of commercial properties is expected to also use this method. However, SCM is criticised for its subjectivity with inconsistent prediction; SCM procedure relies too much on the expert judgment of the valuer such that the value of property varies between valuers. This paper puts forward a proposal for an alternative technique using SCM that will minimise subjectivity in property value prediction with reduced complexity. The aim of this research is to develop a formal automated procedure of the Sale Comparison Method for double storey terrace house. The conceptual procedure was developed by examining peer research, Malaysian Valuation Standard, a standard in use throughout the Valuation and Property Services Department in Malaysia. The research uses this conceptualisation to examine the extent to which a formal procedure can be developed for double storey terrace. Taman Daya and Bandar Mahkota Cheras were chosen due to substantive data in that locality. The conceptualisation translated into an alternative technique follows three steps of property valuation. For the comparable selection, Minkowski metric is used for selecting the best comparable, then Ordinary Least Square (OLS) regression model is used for adjustment of the comparable and lastly weighting strategies for comparable reconciliation. Seven years data of double storey terrace houses is empirically tested using the alternative procedure and it is found that for 10% estimation range the accuracy of valuation is between 51% and 93% while for 20% estimation range the accuracy of valuation is between 76% and 97%. The finding satisfied the 10% acceptable range specified by the technical circular of the Valuation Department therefore the result obtained proved that the proposed procedure can be accepted for single valuation purposes. The proposed technique closely resembles the existing procedure to gain the confidence of valuers; however, tasks that require judgments from valuers are substituted with statistical methods. This technique avoids the often criticised complexities of the new SCM variants. Integration of this formal implementation with Geographic Information System (GIS) resulted of an automated valuation model (AVM). AVM is more accurate and less human bias also can reduce cost of operation and can realized quick valuation compared to valuation exercised manually. Computational intelligence Intelligence control systems 2013-12 Thesis http://psasir.upm.edu.my/id/eprint/47866/ http://psasir.upm.edu.my/id/eprint/47866/1/FK%202013%2027R.pdf application/pdf en public phd doctoral Universiti Putra Malaysia Computational intelligence Intelligence control systems
institution	Universiti Putra Malaysia
collection	PSAS Institutional Repository
language	English
topic	Computational intelligence Intelligence control systems
spellingShingle	Computational intelligence Intelligence control systems Abdul Rahman, Rohana Alternative procedure of sales comparison method in valuing property
description	The Sales Comparison Method (SCM) is the most widely used method of property valuation; particularly for residential properties. With transaction data becoming more and more accessible, the trend of using Comparison Method will continue; the valuation of commercial properties is expected to also use this method. However, SCM is criticised for its subjectivity with inconsistent prediction; SCM procedure relies too much on the expert judgment of the valuer such that the value of property varies between valuers. This paper puts forward a proposal for an alternative technique using SCM that will minimise subjectivity in property value prediction with reduced complexity. The aim of this research is to develop a formal automated procedure of the Sale Comparison Method for double storey terrace house. The conceptual procedure was developed by examining peer research, Malaysian Valuation Standard, a standard in use throughout the Valuation and Property Services Department in Malaysia. The research uses this conceptualisation to examine the extent to which a formal procedure can be developed for double storey terrace. Taman Daya and Bandar Mahkota Cheras were chosen due to substantive data in that locality. The conceptualisation translated into an alternative technique follows three steps of property valuation. For the comparable selection, Minkowski metric is used for selecting the best comparable, then Ordinary Least Square (OLS) regression model is used for adjustment of the comparable and lastly weighting strategies for comparable reconciliation. Seven years data of double storey terrace houses is empirically tested using the alternative procedure and it is found that for 10% estimation range the accuracy of valuation is between 51% and 93% while for 20% estimation range the accuracy of valuation is between 76% and 97%. The finding satisfied the 10% acceptable range specified by the technical circular of the Valuation Department therefore the result obtained proved that the proposed procedure can be accepted for single valuation purposes. The proposed technique closely resembles the existing procedure to gain the confidence of valuers; however, tasks that require judgments from valuers are substituted with statistical methods. This technique avoids the often criticised complexities of the new SCM variants. Integration of this formal implementation with Geographic Information System (GIS) resulted of an automated valuation model (AVM). AVM is more accurate and less human bias also can reduce cost of operation and can realized quick valuation compared to valuation exercised manually.
format	Thesis
qualification_name	Doctor of Philosophy (PhD.)
qualification_level	Doctorate
author	Abdul Rahman, Rohana
author_facet	Abdul Rahman, Rohana
author_sort	Abdul Rahman, Rohana
title	Alternative procedure of sales comparison method in valuing property
title_short	Alternative procedure of sales comparison method in valuing property
title_full	Alternative procedure of sales comparison method in valuing property
title_fullStr	Alternative procedure of sales comparison method in valuing property
title_full_unstemmed	Alternative procedure of sales comparison method in valuing property
title_sort	alternative procedure of sales comparison method in valuing property
granting_institution	Universiti Putra Malaysia
publishDate	2013
url	http://psasir.upm.edu.my/id/eprint/47866/1/FK%202013%2027R.pdf
_version_	1747811951886467072

Alternative procedure of sales comparison method in valuing property

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