Dr. Spahr & Dr. Sunderman published in the International Journal of Strategic Property Management
For release: February 22, 2016
Dr. Ronald Spahr, professor of Finance, and Dr. Mark Sunderman, Morris Fogelman Real Estate Chair of Excellence and professor of Finance, recently had an article accepted for publication entitled "Using Multiple Criteria Decision Analysis (MCDA) to Assist in Estimating Residential Housing Values" in the International Journal of Strategic Property Management. The paper was also co-authored with Dr. Fernando Ferreira, University Institute of Lisbon Portugal. He was a visiting scholar and is now continuing as a University of Memphis Research Associate.
The authors convened a panel of residential real estate experts (i.e. appraisers and realtors), who operate in Memphis, to conduct a study using a multiple criteria decision analysis (MCDA-based) framework. The results of this study 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 property comparables and/or hedonic modeling. The paper provides evidence that the integration of cognitive maps and MACBETH holds significant potential for strategic planning by assisting real estate professionals in obtaining consolidated information to, one, discriminate homes according to a system that was developed based on their own experiences, perceptions, convictions, and value judgments; two, compare relative positions of evaluated houses against cognitive references; and, three, promote discussion and increased transparency throughout the residential real estate value/price estimation process. By integrating two different methodologies (i.e. cognitive mapping and MACBETH), their valuation approach results in initial asking prices that may satisfy both sellers and agents yet be attractive to potential buyers. They find no prior study applying the integrated use of these two methods for real estate valuation.