AHP and NLO-integrated SCA: improving the sales comparison technique through multicriteria optimization

Purpose Under the framework of the sales comparison approach (SCA), the sales comparison adjustment grid is among the most well-known and widely used appraisal techniques for assessing the market value of a property. Regardless, the technique application often suffers from a remarkable limitation: the marginal prices of the property attributes are seldom chosen by the appraisers based on related theories and methods; instead, that choice is recurrently based solely on their experience, which implies the marginal prices may not fully reflect the actual market appreciation for the attributes. Design/methodology/approach Here, we propose to nest an analytic hierarchy process (AHP)-based estimation and a nonlinear optimization (NLO) method into the SCA, meant to elicit the marginal prices of the property attributes from market data and overcome the subjectivity issue inherent in SCA. Findings In the paper, the method is worked out, and several validations are proposed, too. The SCA integrated with AHP and NLO proves to be effective in providing reliable estimates of the subjects, with minor to negligible errors primarily due to the available data structure. Originality/value The improvement to SCA we outline here requires no additional data beyond the traditional SCA. It is meant to strengthen the somewhat shaky ground on which the technique rests, but also to be easily replicable by practitioners and appraisers using a worksheet and standard add-in packages.