The Comparative Approach theory for real estate valuation

Comparative approach is embedded in the International valuation standards (IVS) or also in European valuation standards (EVS) as a main approach to receive a market value of realty. Course this is conditional on the existence of the real estate market, its supply and demand. This paper introduces advanced and detailed procedure against the usual classical procedure of qualified valuers and appraisers. Specifically in the comparative approach procedure were included diagnostic procedures based on statistical approach, mainly because of the type of good that is significantly heterogeneous and inclusion of vector calculus. Main task is to improve the process of selecting the basic sample data into sample set, ie qualitative analysis. It is very necessary, because in the event of poor performance of this step arises incorrect assumption when processing the sample data. This step should be improved by including cluster analysis (CLU), where each entity in the calculation with their variables, ie as a cross-sectional data. Values of each variable and their combination for one observing will indicate the degree of heterogeneity of the observing. Another way could be to use Hotelling T-2 control chart. It also allows qualitative selection of data the basic set. However the paper contains the entire procedure within the comparative approach, the unified methodology that is supported by the model cases. (C) 2014 The Authors. Published by Elsevier Ltd. Selection and peer review under responsibility of Organizing Committee of BEM 2013.