The way to price a property: Hedonic Pricing Model

Concept:

It was a valuation model introduced by

• Court in 1939, to determine the hedonic price index of automobiles.
• Later, Lancaster in 1966 included the utility of the product features which create the consumer benefit. ?

This set of attributes will influence Customers’ willingness in paying to enjoy the benefits

In a nutshell. HPM is a valuation model to study the right pricing of a product or service by examining the internal Characteristics of the products and external environmental factors.

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Application:

1.??The model quantifies the environmental value of an ecosystem/factors ?

2.?The factors must be relevant and capable of influencing the market price of the goods or asset

3.? It requires strong degree of statistical expertise and model specification to simulate the system.

4.? Often used to estimate the pricing that customer willing to pay for the perceived benefits.

Kindly ????????????. and give me your ???????????? ?below if you would like to have a research paper for a reference.

Examples of property:

Property:

Internal characteristics:

·???????? Land size, Land shape,

·???????? The stuctures, size, number of floor

External Factors:

·???????? Location:

·???????? Accessibilities

·???????? Neighboring factors: Amenities/ facilities

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How reliable is this Model?:

Hedonic Valuation model is just a tool to structure the data and simulate the price of property. As the above picture showed. Property poses unique characteristic and differ in terms of complexity and Data Availability.

Thherefore, we have to learn this model, consistent apply it and adjust the applications to get the best out of this model.?

Kindly ????????????. and give me your ???????????? ?below if you would like to have a research paper for a reference.

#henryvaluer

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Sources:

[1]RICS on this model: https://youtu.be/VAcpTuGhxHo

[2]https://www.investopedia.com/terms/h/hedonicpricing.asp

[3]https://corporatefinanceinstitute.com/resources/valuation/hedonic-pricing/

[4]https://www.academia.edu/12077422/HEDONIC_PRICE_MODEL_AND_ITS_APPLICATION_TO_THE_HOUSING_MARKET_LITERATURE_REVIEW_?auto=download

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