Hello, I am a real estate appraiser and have a question regarding the Multiple Regression Analysis (MRA) results. I would like to lay some foundation first. I use the MRA spreadsheet to obtain, from a mathematical perspective, economic responses for square footage, # of stories, # of bathrooms, bedrooms and garage bays as well as square footage of parcel sizes to name a few of the independent variables. Of course, my dependent variable is the sales price. With that said, often the results will have negative coefficients. For instance, after running an MRA just a moment ago, the coefficient result for stories was -$25,082. The independent variable column only had 1 for single story homes, 2 for 2 story homes and 3 for3 story homes. I don't understand the coefficient conclusion of minus $25,082. What is that indicating? Why is it negative?
The minus value at the end of the equation is perhaps not a coefficient but the intercept of the equation after the application of independent variable coefficients. This can very well be negative as the coefficients alone result in an inflated sales price that must be adjusted by this amount for the correct value when using the equation for prediction. If this is from the independent analysis for the stories variable then it relates to only that variable when compared to the sales and is not applicable to the overall multiple regression equation. Lets say stories is 2 and the sales price is 105,000 then a coefficient of 65,000 would make 130,000 and need to deduct 25,000 to get the correct sales price.
