Response Errors in Estimating the Value of Homes
Abstract * The authors are indebted to Clarke L. Fauver of the staff of the Federal Reserve Board, who initiated the research reported here while he was on the staff of the Board's division of Research and Statistics. They are also indebted to the American Institute of Real Estate Appraisers, the Federal Housing Administration, and the Society of Residential Appraisers for their participation in the field work. In the 1950 Survey of Consumer Finances home owners were asked to estimate the market value of their houses. Estimates for these same homes were later made by professional appraisers. These two estimates for each of 568 homes comprise the data analyzed here. The proportion of discrepancies between the two estimates is great: only 37 per cent of the estimates by respondents are within plus or minus 10 per cent of the appraisers' estimates. However, the errors tend to be offsetting, and in none of the ten price classes used is the difference in the relative frequencies for owners and appraisers stati...