The hedonic method

30.03.2020

The hedonic method applied for the appraisal of real estate properties is based on a comparative approach introduced in the Swiss market by IAZI more than 20 years ago. The property is compared with thousands of other objects previously sold in the market; the price of the object is in this way statistically estimated by comparing the price of similar homes in comparable locations.

A large number of banks, insurances and pension funds use the hedonic models of IAZI to appraise real estate properties before giving out mortgages. Several intermediaries and promoters of real estate projects also use this method to get a fast, affordable and market-related estimate of houses, condominiums and investment properties.

Advantages of this method

  • Market proximity -> the influence of the different characteristics of the property on the final price is not determined by a person, but by the buyers and the sellers themselves, namely the market. By using statistics, the market logic and the method are both extrapolated and generalized; it is therefore possible to define the method as objective.
  • Rapidity -> Provided that all the necessary information on the property are available, an evaluation can be completed in a matter of minutes. It is also very easy to reappraise the property on a later stage, and the continuity can thus be guaranteed.
  • Applicable within whole Switzerland -> The valuation formula can be applied to properties nation-wide, even in regions where there has been a smaller number of transactions.
  • The accuracy of the estimate is known -> In contrast to traditional methods, it is possible to determine the accuracy of the valuation assessed by the hedonic model.

Please find more information on www.iazicifi.ch

Real estate appraisal