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Appraisals and market studies use two types of data-primary and secondary data. The appraiser or market analyst must know what they are and what affects them. All data used in appraisals and market studies should be current, relevant, reliable, accurate, and conceptually correct. This article presents a discussion of each of these terms and their
significance in the context of the data and in the analysis. The article then discusses the nature of potential errors that can affect primary and secondary data. Several categories of errors can exist. The analyst needs to be able to recognize the error, understand Its significance and evaluate the applicability of that
As the foundation of any appraisal or market study, data needs to be current, relevant, reliable, accurate, and conceptually correct. Data can be primary or secondary and the appraiser or market analyst needs to know which type he is using and understand its characteristics and limitations. He also needs to recognize the nature of potential errors that can affect each type of data and how these errors can be handled. This article provides definitions, practical methodology, and a discussion of issues relating to the use of primary and secondary data.
Primary and Secondary Data
Primary and secondary data are defined in The Dictionary of Real Estate Appraisal as follows:
* Primary data-Information that researchers gather first hand.1
* Secondary data-Information from secondary sources, i.e., not directly compiled by the analyst; may include published or unpublished work based on research that relies on primary sources of any material other than primary sources used to prepare a written work.2
The Appraisal of Real Estate provides only a brief discussion of primary data when it states that "specific data and competitive supply and demand data, which deal with the subject property and comparable properties in the subject market, is most often obtained by appraisers themselves and therefore qualifies as primary data."3 This statement is correct but short of being an explicit definition.
The Appraisal of Real Estate also provides only a brief discussion of secondary data when it states that "this secondary data describes the general real estate market and is usually collected by a research firm or government agency."4 Again, this is close to a definition,...