Real Estate Management and Valuation (Mar 2019)
Individual Capacities of Hellwig’s Information Carriers and the Impact of Attributes in the Szczecin Algorithm of Real Estate Mass Appraisal
Abstract
A statistical method of defining the impact of real estate attributes based on individual capacities of Hellwig’s information carriers was proposed in the paper. The method may be used for defining the impact of attributes in the Szczecin algorithm of real estate mass appraisal. The proposed procedure refers to the so-called Hellwig’s method, used for the selection of explanatory variables in an econometric model. In the case of real estate attributes, we typically deal with variables measured on an ordinal scale. Therefore, Kendall’s tau coefficients (tau a, tau b, tau c) will be applied in order to determine the strength and direction of a relation between variables. These coefficients enable the measuring of the strength and direction of a relation between variables measured on an ordinal scale. After valuating proper matrices of Kendall’s tau coefficients, individual capacities of Hellwig’s information carriers were determined, on the basis of which the impact of attributes in the Szczecin algorithm of real estate mass appraisal was defined. The proposed procedure was supported with an empirical example using a real data base that comprises 99 undeveloped land properties of industrial designation, including depots, storehouses, warehouses, and yards. After determining the impact of each attribute, the Szczecin mass appraisal algorithm was used to evaluate values. The obtained real estate values were very close to the values obtained by real estate experts.
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