PurposeThis practice briefing develops a coherent framework for identifying and measuring commercial and industrial externalities, addressing the lack of standardised approaches in valuation practice. Design/methodology/approachThe briefing synthesises evidence from environmental economics, urban planning and real estate finance to construct a five-category typology and translate empirical distance decay patterns into GIS-ready measurement strategies. FindingsCommercial externalities exhibit predictable spatial signatures that can be measured consistently using proximity-based indicators. When organised into a structured typology, these patterns provide a basis for integrating externalities into valuation and investment analysis. Practical implicationsThe framework enables practitioners to replace subjective adjustments with transparent, replicable spatial measures, improving valuation defensibility, underwriting accuracy and communication among market participants. Originality/valueTo our knowledge this is the first unified, practitioner-oriented framework that consolidates empirical externality research into a usable structure tailored to commercial valuation and GIS-based analysis.

Purpose This study aims to inform the reader of empirical studies investigating the influence of lucky and unlucky numbers on real property markets. Design/methodology/approach The studies in this review were identified by searching several search engines, including Google Scholar and Business Source Complete. Findings Real estate markets around the world appear to have been influenced by lucky and unlucky numbers. Most studies to date suffer from one or more problematic issues. The opportunities for additional research are extensive. Originality/value To the best of the author’s knowledge, this is the first literature review of studies on the topic.

This paper presents a chronology, beginning in the early 1900s, of the regulatory environment faced by residential real estate appraisers in the United States. The presentation informs the reader about two financial crises, the savings and loan crisis and the Subprime mortgage crisis. The conditions that led to each crisis, the response of Congress to address each crisis, and the effect of both on residential real estate appraisers are included in the presentation. Prior to these crises, appraisers were basically self-regulated, but today because of concern that inflated appraisals were a contributing cause of the crises they are subject to rules and regulations imposed by both federal, and state authorities. The regulatory measures instituted to address the savings and loan crisis failed to prevent the subsequent Subprime mortgage crisis, and measures instituted to end the Subprime mortgage crisis had unintended negative effects. This begs the question, will the regulations in place now prevent the occurrence of a future crisis.

Purpose The aim of this Education Briefing is to comment on the problematic issues that sometimes arise when using the internal rate of return (IRR) and/or the net present value (NPV) as a measure of expected investment performance. The briefing looks at the sometimes conflicting signposts that each benchmark presents and highlights ways that decision-makers can overcome or mitigate the effects of those problematic issues. Design/methodology/approach After a short review of the IRR and NPV techniques, this Education Briefing provides numerous examples of problematic issues that arise with certain cash flow profiles and suggests how to address them. Findings Both the IRR and NPV provide simple benchmarks that can mislead the decision-maker who is not familiar with the nuances of both techniques. Practical implications This review should heighten the reader’s ability to spot characteristics of proposed investments that may signal that a quick decision based on performance metrics may lead to disappointing results. These characteristics include: scale effects, unusual cash flow patterns and/or investments with dissimilar expected lives. Mutually exclusive investments merit special attention. Originality/value This is a review of existing performance measurement models.

Poor-quality mortgage appraisals are thought to have played a role in real estate market downturns from the 1980s to the 2000s. Prior research measuring appraisal quality based upon ex post audits of individual appraisals, however, have been limited to small samples of limited power and flexibility. The present paper uses digital distribution theories to derive appraisal quality indicators for 6.5 million mortgages originated from 2000 to 2007. We establish that appraisal risk is multi-layered, so that two appraisal quality indicators are more informative than one. Conditional mixed process models of default assuming endogeneity in appraisal quality choice show that poor quality appraisals typically raise default risk by about 1% (of a total of 4% - 10%) in non-crisis years, increasing to 2%-3% (of a total of roughly 20%) in 2006-2007. Interacting appraisal quality indicators with payment-reduction affordability features to account for risk layering, however, results in marginal effects up to 9% (of a total of roughly 30%) in 2006-2007. Moreover, while adverse appraisals increase default risk in all years, affordability features either have no effect upon or reduce default risk outside the crisis, suggesting that affordability features may benefit borrowers when accompanied by careful underwriting.

Equity investors are always interested in identifying profitable trading strategies.The price-to-earnings ratio (P/E) and price-to-sales ratio (P/S) are two simple metrics that researchers have reported may meet this objective under particular market conditions.During our study period, which is longer in duration than most of the previous works, the performance of portfolios based on P/S dominated those based on P/E.However, portfolios based upon the combination of low P/E and net profit momentum outperformed all other strategies tested.Another way the predictive power of P/E may be improved is by dividing it by a measure of the firm's earnings growth, yielding a composite metric known as the price-to-earnings-to-earnings growth ratio (PEG).This metric has gained the attention of professional investors and researchers.Because many investors prefer P/S over P/E, it is surprising that a counterpart to PEG has not gained similar traction.Our results provide evidence that helps explain why the price-to-sales-to-sales growth ratio (PSG) has failed to gain attention.Our results also indicate that none of these market multiples alone can be employed to provide consistently profitable investment performance.

Purpose The purpose of this paper is to add to the single-family house bargaining power literature by investigating the bargaining power of the principals when the seller provides financing with an installment land contract (ILC). Design/methodology/approach Generalized spatial two-stage least squares regression is used to analyze data from 998 ILC transactions and 19,376 traditionally financed transactions all of which occurred in Montgomery County, Ohio between January 2002 and March 2011. Findings The results indicate that buyers using an ILC operate at a bargaining power disadvantage. In our sample, they paid approximately 6.64 per cent more, on average, than did buyers using traditional financing to purchase similar housing. This result occurred despite the fact that the included ILC transactions were limited to those carrying an interest rate that was above the Federal Housing Administration (FHA) rate at the time of contract origination. Research limitations/implications The study is limited to transactions that occurred in one county of a Midwestern state over a ten-year period. Therefore, the results may not apply in other locations. Valuable extensions of the current study would include an investigation to determine if similar results apply in other local housing markets. In addition, an examination of ILC transactions for other property types (e.g. undeveloped land, commercial properties, etc.) which may involve more sophisticated vendees could prove interesting. Originality/value This is the first study to investigate bargaining power in the single-family house market by focusing on ILC transactions. In this rather unique market segment, evidence of an imbalance of bargaining power is found. The results suggest that prospective purchasers, real property investors, fee appraisers, county auditors and others interested in determining the value of a single-family house using the transaction price of comparable properties take precautions in identifying comparable properties. The results indicate that house acquisitions facilitated with an ILC may not be a good comparable for a traditionally financed property and vice versa.

A previous study led its authors to conclude that superstition impacts price formation for single-family dwellings in the Vancouver area. Houses there with an address that ends in the "unlucky" number 13 are found to sell at a discount compared to otherwise similar houses. The primary objective of this study is to determine whether the previous results apply in another North American housing market. Hedonic regression is applied to single-family house transactions that occurred in Montgomery County, Ohio, to determine if houses with an address of 13 sold for different prices than houses that comprise the remainder of the sample. The same test is then conducted for houses with an address other than 13. No mispricing associated with the number 13 is discovered, but seven other addresses are found to be significantly related to price. As all but one of the significant house numbers identified in this study are not reputed to be particularly lucky or unlucky, we conclude that the price effects discovered are attributable to coincidence. The results of this first study to investigate the possibility of mispricing due to superstition about the number 13 in a residential property market in the United States are consistent with rational market behavior.

A previous study led its authors to conclude that superstition impacts price formation for single-family dwellings in the Vancouver area. Houses there with an address that ends in the "unlucky¨ number 13 are found to sell at a discount compared to otherwise similar houses. The primary objective of this study is to determine whether the previous results apply in another North American housing market. Hedonic regression is applied to single-family house transactions that occurred in Montgomery County, Ohio, to determine if houses with an address of 13 sold for different prices than houses that comprise the remainder of the sample. The same test is then conducted for houses with an address other than 13. No mispricing associated with the number 13 is discovered, but seven other addresses are found to be significantly related to price. As all but one of the significant house numbers identified in this study are not reputed to be particularly lucky or unlucky, we conclude that the price effects discovered are attributable to coincidence. The results of this first study to investigate the possibility of mispricing due to superstition about the number 13 in a residential property market in the United States are consistent with rational market behavior.

Purpose– Researchers have previously examined, with mixed results, whether experience in the single-family house market enhances a buyer's bargaining power by comparing prices paid by relatively young first-time buyers and experienced buyers. The present study aims to extend this basic line of inquiry, but the focus here is on both buyers and sellers at the other end of the age spectrum as the authors investigate the bargaining power of senior citizens (age 65 or older) in the single-family house market.Design/methodology/approach– Hedonic regression is used to analyze approximately 6,200 transactions that occurred in Montgomery County, Ohio during the years 2007 through 2009.Findings– No difference is discovered between prices paid for a single-family house by senior citizens and other buyers in the sample. However, senior citizens in this study sold property for 5.9 percent less than other sellers,ceteris paribus, suggesting that when they sold their homes, other factors put seniors at a bargaining power disadvantage.Research limitations/implications– Data limitations prevent the authors from specifying the precise reasons underlying the results concerning senior house sellers, but numerous possibilities are presented. Testing whether the results apply in other local housing markets would be a valuable extension of this research, as would identification of the factors associate with any bargaining power imbalance.Practical implications– The economic principle of substitution suggests that assets that provide identical utility should command identical prices, but for heterogeneous goods the relative bargaining power of the principals may be important in the price formation process. The present study offers interesting results that in the case of senior buyers support the law of one price, but in the case of senior sellers, bargaining power differences dominate.Originality/value– This is the first study to investigate bargaining power in residential real estate markets by comparing transaction prices involving senior citizens and other buyers and sellers.

Purpose – The purpose of this study is to gauge and compare the impact of surface street traffic externalities on residential properties. Limited previous research indicates that negative externalities dominate for single-family houses. Our objective is to verify that this result applies to our sample, and to determine if the same result extends to multi-unit rental properties. Design/methodology/approach – Hedonic regression is used to analyze data from 9,680 single-family house transactions and 455 multi-unit rental properties to measure the influence of surface street traffic on the price of the two property types. Findings – Houses located adjacent to an arterial street sold at a 7.8 per cent discount, on average, compared to similar houses located on collector streets. Limiting the analysis to houses adjacent to an arterial street (where traffic counts were available), price and traffic count are negatively related. The results for multi-unit rental dwellings are dramatically different. Multi-unit properties adjacent to an arterial street sold at a 13.75 per cent premium compared to similar properties on collector streets, and when limiting the analysis to properties on arterial streets, no significant relationship was detected between price and traffic volume. Originality/value – This is the first empirical study of the influence of surface street traffic on both single-family houses and multi-unit rental residential property. Evidence is provided that traffic externalities impact the two types of properties quite differently. To the extent that this result applies to other locations, the authors suggest planners may be able to use such information to reduce the negative effect of traffic externalities on residential property associated with changes that will increase traffic flow.

This paper describes an innovation in mortgage finance that may reduce the benefits of making extra mortgage payments. Specifically, some loan servicers may not be using such payments to immediately reduce loan principal. Examples are provided to show that, ceteris paribus, this procedure can result in a substantially longer time until debt elimination, more total interest expense, and higher effective interest rates compared to loans where additional payments are traditionally applied. The effects are shown to be sensitive to the loan interest rate, the original loan life, and prepayment size, and to apply to both fixed-rate and adjustable-rate mortgages.

This study investigates the relationship between surface street traffic volume and single-family house prices in a relatively small city in the US. Hedonic price models are estimated using data from 9670 transactions that occurred between January 1998 and March 2011. It is discovered that parcels fronting or adjacent to a high-traffic street sell, on average, at an 8.1% discount compared to similar parcels that are not so situated. Restricting the analysis to parcels on or adjacent to a high-traffic street, house price and traffic volume are found to be negatively related; a doubling of volume from any particular traffic count, ceteris paribus, reduces selling price by an average of 2.1%. (C) 2012 Elsevier Ltd. All rights reserved.

PurposeThe purpose of this paper is to determine if lender experience in disposing of repossessed single‐family houses in the local market is significantly related to the probability a property will sell. In addition, other factors that are significantly related to the market duration of repossessed houses are identified.Design/methodology/approachThe Cox proportional hazard model is used to analyze transaction data for 2,099 single‐family houses in Dayton, Ohio. Title to each of these properties was obtained by lenders through foreclosure. The study period approximates the first three years of the subprime mortgage crisis in the USA: 2007‐2009.FindingsThe marketing efforts of lenders with more local property disposition experience are found to be superior to the efforts of less experienced lenders. The results also indicate that the selling rate function increased over the study period, and there is seasonality in the data which is consistent with lenders attempting to limit holding costs.Research limitations/implicationsThe study is limited to the experience of lenders in a single local market over a three year study period. Additional research to determine if similar results apply in other markets would be a valuable addition to the literature.Practical implicationsWhile foreclosure is not a desirable outcome for any of the parties involved in a mortgage loan, the paper's results offer a bit of good news for lenders. The results are consistent with organizational learning theory which posits that experience should enhance performance. Given predictions that the mortgage crisis has not yet run its full course, lenders' performance in disposing of repossessed houses is likely to continue to improve.Originality/valueThis is the first study to apply the proportional hazard model to the study of foreclosed houses. This technique offers an advantage over previously applied methodologies because it allows the researcher to include properties that lenders did not sell during the study period into the analysis. All previous efforts were limited to sold properties and this restriction may have biased the previous results.

When a consumer contacts a company, it provides the firm with an opportunity to begin a dialogue. If a problem occurred with a good or service, a customer complaint provides a company with the opportunity to correct the problem and perhaps retain a customer. A consumer compliment provides the opportunity to turn a satisfied consumer into a brand advocate. Yet surprisingly nearly 30% of the companies in this study allowed this vital opportunity to go to waste. KEYWORDS: complaintsconsumer correspondencecomplimentsconsumer dialogue

The unique institutional environment of China‟s stock markets provides a rich setting to study the relationship between investors‟ behavior and market returns in the case of information inefficiency. This study extends the well documented Dogs of the Dow (Dow Dogs) strategy to China‟s A share stock market. We find that Dow Dogs portfolios significantly outperform the market benchmark for the period of 1994 to 2009 in China‟s markets. Further analysis indicates that (1) The fewer Dogs included in the portfolio, the greater the portfolio abnormal returns; (2) In general, the shorter holding period (in months), the greater the portfolio abnormal returns. These findings are robust even after adjusting for transaction costs and taxes. Our study contributes to the behavioral finance literature by providing new empirical evidence of the market anomaly.

PurposeThis paper aims to report the results of a study conducted to determine whether investors systematically pay less for single‐family houses than do buyer/residents.Design/methodology/approachData from 3,443 single‐family house transactions were subjected to regression analysis.FindingsInvestors in this study paid 13.24 percent less, on average, than buyers who reside in the property.Research limitations/implicationsThe study was limited to transactions occurring during a single year in one American city. Future research could test whether the results apply in other locations. The study did not consider the influence of seller‐type on transaction price. Future studies could incorporate this facet of the transaction. The results have implications for property tax authorities and fee appraisers because the presence of investors in a housing market may introduce a two‐tiered transaction set which could distort the assessment process and/or the indicated value calculated by fee appraisers using the comparable sales approach.Originality/valueThis paper provides useful information on the impact of buyer‐type on house price.

PurposeThe purpose of this paper is to empirically test whether residents' satisfaction with seven general purpose public services are capitalized in single‐family house prices. The public services investigated are: fire protection, paramedic services, police protection, trash removal, snow removal, street maintenance, and neighborhood parks.Design/methodology/approachThe seven service satisfaction measures, derived from a public opinion survey, are grouped into three variables based on the city department responsible for providing the service and included in a hedonic regression of single‐family house transactions that occurred in Dayton, Ohio.FindingsAll three satisfaction variables are positively related to house price, providing evidence that intra‐jurisdictional differences in the nature of public services are capitalized through market processes.Social implicationsThe strength of the satisfaction measures in the regression model suggests that efforts to improve citizen satisfaction may be an important component of local efforts to stabilize urban neighborhoods and improve property values.Originality/valueThe present study is the first to use transaction prices rather than assessed values to analysis multiple general public services simultaneously. Because almost all previous studies investigate multiple jurisdictions the present study is also fairly unique as it focuses on different locations within a single jurisdiction. The use of survey responses regarding resident satisfaction with public services represents an advance on previous measures of public service provision because it potentially reflects underlying motivations of buyers and sellers very directly.

PurposeThe purpose of this study is to test the hypothesis that neighborhoods characterized by satisfying social relationships among residents have higher housing prices than areas where people are less satisfied with their neighbors.Design/methodology/approachA semi‐logarithm regression model is used to test whether the extent of satisfaction with neighbors is significantly related to transaction prices of houses in 59 neighborhoods in Dayton, Ohio.FindingsThe results are consistent with, and more specific than, previous studies linking social capital to neighborhood stabilization. Resident satisfaction with their neighbors is found to be an important determinant of property value controlling for housing characteristics.Practical implicationsThe findings support stabilization and economic development strategies that seek to enhance social relationships in urban neighborhoods.Originality/valueThis study is the first effort to examine the impact of relations among neighbors on housing prices while controlling for traditional housing characteristics. The paper is an important step in unbundling the social capital concept and points policy makers in directions that can improve community property values.