A multiple criteria analysis model for real estate evaluation

Abstract

Real estate evaluation is of great importance and interest to many socio-economic agents, especially to property buyers and sellers for personal benefits, municipalities for tax purposes, financial institutions for loan policies, and to real estate brokerage firms for marketing activities. Although these agents are motivated in their actions by different objectives, even conflicting at times, they all desire to have a realistic description of the real estate market behavior in order to make right and timely decisions. This article presents an estimation model to describe the behavior of real estate markets. The model is based on certain observable real estate market data as well as on the perceptions of real estate agents who are active in the market. The parameters that describe the behavior of the real estate market are estimated, through the estimation model, using mathematical programming tools within a multiple criteria analysis context. The usefulness and applicability of the approach is empirically shown through an implementation using the data of the City of Edmonton, Alberta, Canada.