Appraisal Smoothing : The Other Side of the Story - a Comment

This comment points out certain errors of application and interpretation in a recent article by Lai and Wang, published in Real Estate Economics. The chief mistake is that Lai and Wang have failed to adequately distinguish between disaggregate level random error, and systematic error which carries through to aggregate indices. It is argued here that this and other errors render the Lai-Wang article seriously misleading, a problem which is compounded by the article's tone, which seems to imply that the previous appraisal smoothing literature has been one-sided. This comment also suggests a broader perspective from which to conceptualize the problem of appraisal smoothing, and more productive directions for future research