Determining Residential Values ~ Denver, ColoradoThere are various statistical models for determining the value of residential real estate. Zillow, Case-Shiller, OFHEO are all sources where appraisers look for pricing trends. Each source is unique in arriving at a value. Interestingly when comparing the models they tend to arrive at a value with relative consistency.
The newest model used is the Absorption rate pricing which considers the amount of homes available on the market (inventory) and divides by the amount of sales in that market to determine the number of weeks it would take to sell (assuming no other homes come on the market). Realtors are using this model to arrive at better pricing. Absorption rate pricing can and should be used drilling down to the LOCAL neighborhood in order to provide the best pricing guidance.
For an overview of the models, how they are determined please view this power point, developed by Larry D. McGee, managing broker of The Berkshire Group as presented to the Appraisal Institute this weekend!
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