The Comparable Sales Method of Valuation (CSM) is widely used in the United States for valuing residential properties. There is an identifiable relationship between CSM as practiced by mass appraisers and the recent developments in spatially aware valuation models. A modified CSM (MCSM) is shown to be a special case of a spatially lagged weight matrix model. There is a less formal but clear relationship with Geographically Weighted Regression as well. The predictive accuracy of the CSM and MCSM are compared to several Ordinary Least Squares Model configurations, and results obtained from Geographically Weighted Regression via empirical studies on diverse datasets. An example of a comparable sales weighting scheme as practiced by mass appraisers is provided. In addition, particular interest is focused on how well each method is able to model the spatial variations in property values. This is done by examining the spatial autocorrelation in residual errors of the predicted values.
|Title of host publication||Mass Appraisal Methods: An International Perspective for Property Valuers|
|Editors||Tom Kauko, Maurizio d'Amato|
|Publisher||John Wiley & Sons, Inc.|
|Publication status||Published - 2008|
Borst, R. A., & McCluskey, W. (2008). The Modified Comparable Sales Method as the Basis for a Property Tax Valuations System and its Relationship and Comparison to Spatially Autoregressive Valuation Models. In T. Kauko, & M. d'Amato (Eds.), Mass Appraisal Methods: An International Perspective for Property Valuers (pp. 49-69). John Wiley & Sons, Inc.. http://media.wiley.com/product_data/excerpt/78/14051809/1405180978-1.pdf