Estimating Property Value By Replicating One

This paper develops a Replication method for estimating property values. Under this method, an appraiser’s assignment is to estimate an optimal weight vector that can best replicate the property attributes of a subject property using comparable properties. Once the weights are determined, the value of the subject property is simply a linear combination of the values of the comparable properties based on the estimated weight vector. Since there is no need to estimate hedonic prices (or adjustment factors) of property attributes, the Replication method is superior to the traditional Regression method when there are multicollinearity and misspecification problems. The Replication method also outperforms the Grid method when the number of comparables used in the valuation is no less than the number of property attributes identified for the comparable properties.