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作者

Alexander N. Bogin;Jessica Shui

来源

JOURNAL OF REAL ESTATE FINANCE AND ECONOMICS,Vol.60,Issue1,P.40-52

语言

英文

关键字

Automated valuation models;Appraisal;Property value;Rural;G21;L85;R3

作者单位

Federal Housing Finance Agency, Office of Policy Analysis & ResearchWashingtonUSA

摘要

Accurate and unbiased property value estimates are essential to credit risk management. Along with loan amount, they determine a mortgage’s loan-to-value ratio, which captures the degree of homeowner equity and is a key determinant of borrower credit risk. For home purchases, lenders generally require an independent appraisal, which, in addition to a home’s sales price, is used to calculate a value for the underlying collateral. A number of empirical studies have shown that property appraisals tend to be biased upwards, and over 90 percent of the time, either confirm or exceed the associated contract price. Our data suggest that appraisal bias is particularly pervasive in rural areas where over 25 percent of rural properties are appraised at more than five percent above contract price. Given this significant upward bias, we examine a host of alternate valuation techniques to more accurately estimate rural property values.