Research paper SB 2026–1/I
Copying
Transaction
Prices.
How Dutch Housing Appraisals
Track Idiosyncratic Variation
Authors
Ramon F. A. de Punder
Mathijs R. G. Dijkstra
Affiliations
University of Amsterdam
Tinbergen Institute · SB Research
Publication
53 pages · English
PDF · 1.6 MB
Inside the paper
When the appraisal
follows the price.
An appraisal is intended to provide an independent estimate of a dwelling’s market value.
We find instead that appraisals track the realized transaction price, including its idiosyncratic component, the part specific to this buyer and this sale, which carries no information about the price upon resale.
Read the full abstract
This follows from the incentives in mortgage lending: all parties to the transaction benefit when the appraisal allows the purchase to proceed, so that a valuation formed with reference to the agreed price tends towards that price. In Dutch residential transactions, nearly all appraisals are multiples of €5,000, and up to rounding to that amount, 41.5% of appraisals equal the transaction price.
A Monte Carlo test, which accounts for the uncertainty in the price of each dwelling, shows that appraisals lie far closer to realized prices than independence would allow, providing overwhelming evidence against it. Regressions show that appraisals pass on about four fifths of the deviation of the price from the mean of its estimated distribution, and we show that such copying raises the collateral risk for both borrower and lender.
These findings call into question physical appraisals as an independent safeguard, and point to statistical valuation models, formed independently of the transaction price, as a natural alternative.
Keywords Idiosyncratic copying · Collateral risk · Predictive distributions
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