# RECORD 275ba36694510670b966960c4ff3436b3081cc78 # TITLE: Using multiple criteria decision analysis (MCDA) to assist in estimating residential housing values # YEAR: 2016.0 VENUE: nan DOI: 10.3846/1648715x.2015.1122668 # AUTHORS: F. Ferreira; Ronald W. Spahr; Mark A. Sunderman # PAGES: 17 CANDIDATE TABLE PAGES (1-based): [] # ABSTRACT: Considerable literature exists regarding the complexity of the residential real estate appraisal process and the methods employed to determine initial listing prices as estimates of intrinsic market prices. Deviations in residential real estate intrinsic values occur due to a multiplicity of attributes and explanatory factors requiring consideration. We conduct a panel study using a Multiple Criteria Decision Analysis (MCDA) based framework that utilizes the skills and knowledge of a panel of residential real estate professionals (i.e. appraisers and realtors). We demonstrate how cognitive mapping and the Measuring Attractiveness by a Categorical Based Evaluation Technique (MACBETH) may assist in estimating appropriate offer/sale prices and strengthening current valuation approaches such as using comparables and/or hedonic modeling. The managerial implications of our MCDA-based framework and some avenues for future research are also presented. ===== PAGE 1 (score 4, numeric-paren 0, table-words 0, var-words 4) ===== Copyright © 2016 Vilnius Gediminas Technical University (VGTU) Press http://www.tandfonline.com/tspm Using Multiple Criteria Decision ANALYSIS (mcda) TO ASSIST IN ESTIMATING RESIDENTIAL HOUSING VALUES Fernando A. F. FERREIRA a,b,*, Ronald W. SPAHR b, Mark A. SUNDERMAN b a ISCTE Business School, BRU-IUL, University Institute of Lisbon, Avenida das Forças Armadas, 1649–026 Lisbon, Portugal b Fogelman College of Business and Economics, University of Memphis, Memphis, TN 38152–3120, USA Received 24 February 2015; accepted 27 July 2015 ABSTRACT. Considerable literature exists regarding the complexity of the residential real estate ap- praisal process and the methods employed to determine initial listing prices as estimates of intrinsic market prices. Deviations in residential real estate intrinsic values occur due to a multiplicity of at- tributes and explanatory factors requiring consideration. We conduct a panel study using a Multiple Criteria Decision Analysis (MCDA) based framework that utilizes the skills and knowledge of a panel of residential real estate professionals (i.e. appraisers and realtors). We demonstrate how cognitive mapping and the Measuring Attractiveness by a Categorical Based Evaluation Technique (MACBETH) may assist in estimating appropriate offer/sale prices and strengthening current valuation approaches such as using comparables and/or hedonic modeling. The managerial implications of our MCDA-based framework and some avenues for future research are also presented. KEYWORDS: Decision support; Housing valuation; MCDA; Residential real estate 1. INTRODUCTON Accurately estimating the initial asking/sale price for residential real estate is one of the essential first steps in facilitating realtors and sellers suc- cesses in their goal of finding a buyer. Tradition- ally, the estimation of the appropriate initial ask- ing price, from which the final sale price is negoti- ated, has been the responsibility of realtors and appraisers. In many cases, even before appraisers are asked to determine value, real estate brokers and sales associates are asked to establish initial listing prices. Thus, it is critical that these real es- tate professionals understand existing residential housing market conditions and the attributes that determine individual parcel values. The establish- ment of a fair listing price is important in facilitat- ing a timely and mutually beneficial sale. Much has been written about the appraisal pro- cess and the methods employed in the establish- ment of residential real estate initial listing prices. Nonetheless, market value estimation for residen- tial real estate remains a complex undertaking (Englund et al. 1998; Fischer 2003). Residential real estate intrinsic values deviate due to a variety of factors that require consideration in the evalu- ation process. Thus, despite considerable progress to date, each valuation approach has specific limi- tations requiring further clarification of selected criteria and trade-off calculations (Ferreira et al. 2012). Using cognitive maps and multiple criteria decision analysis (MCDA), to address valuation limitations, may prove effective by incorporating multiple perceptions and decision makers into a framework for residential real estate valuation. Methodologically, our MCDA-based framework uses cognitive maps and measures attractiveness to determine an initial offer/ask price for residen- tial real estate by applying a categorical-based evaluation technique (MACBETH) (Bana e Costa, Vansnick 1994; Bana e Costa et al. 2012). MCDA may reinforce current valuation approaches such as the use of comparable properties or hedonic modeling valuation approaches, by potentially re- ducing omitted criteria and promoting better un- * Corresponding author. E-mail: fernando.alberto.ferreira@iscte.pt; fernando.ferreira@memphis.edu International Journal of Strategic Property Management ISSN 1648-715X / eISSN 1648-9179 2016  Volume  20(4): 354–370 doi:10.3846/1648715X.2015.1122668