Regression Analysis

While not used by most appraisers, regression analysis is an important tool that can be used to form an opinion of market value and to isolate / test the significance of value determinants.  Simple Linear Regression is a one (independent) variable method that is known to most by its attempt to explain relationships using the equation for a straight line (y = mx + b).  Many real estate variables can be explained by linear relationships.  The price of homes, for example, can be in part described by size and age.  While location, location, location is still very important, if you are looking at homes with a similar location, you can predict price with size and age.  

Appraisers can also predict the market value of a property based on its distance, for example, from a major tourist attraction.  Thus, regression is especially useful when one variable, like distance, is extremely important in determining sales price.

Multiple Regression Analysis considers more than one independent variable.  Stepwise regression can provide an appraiser with information regarding which factors contribute most when predicting value.   

Contact us with your questions or concerns about regression analysis or regarding your specific appraisal assignment in Nevada at 1-702-568-6699.  We can also be e-mailed at grigdon@cox.net.  

Commercial Real Estate Appraisals in the Las Vegas & Henderson, Nevada Area.