Mass appraisal of residential apartments: An application of Random forest for valuation and a CART-based approach for model diagnostics

To the best knowledge of authors, the use of Random forest as a potential technique for residential estate mass appraisal has been attempted for the first time. In the empirical study using data on residential apartments the method performed better than such techniques as CHAID, CART, KNN, multiple regression analysis, Artificial Neural Networks (MLP and RBF) and Boosted Trees. An approach for automatic detection of segments where a model significantly underperforms and for detecting segments with systematically under- or overestimated prediction is introduced. This segmentational approach is applicable to various expert systems including, but not limited to, those used for the mass appraisal.Random forest, mass appraisal, CART, model diagnostics, real estate, automatic valuation model

Developing Real Estate Automated Valuation Models by Learning from Heterogeneous Data Sources

In this paper we propose a data acquisition methodology, and a Machine Learning solution for the partially automated evaluation of real estate properties. The novelty and importance of the approach lies in two aspects: (1) when compared to Automated Valuation Models (AVMs) as available to real estate operators, it is highly adaptive and non-parametric, and integrates diverse data sources; (2) when compared to Machine Learning literature that has addressed real estate applications, it is more directly linked to the actual business processes of appraisal companies: in this context prices that are advertised online are normally not the most relevant source of information, while an appraisal document must be proposed by an expert and approved by a validator, possibly with the help of technological tools. We describe a case study using a set of 7988 appraisal documents for residential properties in Turin, Italy. Open data were also used, including location, nearby points of interest, comparable property prices, and the Italian revenue service area code. The observed mean error as measured on an independent test set was around 21 K€, for an average property value of about 190 K€. The AVM described here can help the stakeholders in this process (experts, appraisal company) to provide a reference price to be used by the expert, to allow the appraisal company to validate their evaluations in a faster and cheaper way, to help the expert in listing a set of comparable properties, that need to be included in the appraisal document

Developing Real Estate Automated Valuation Models by Learning from Heterogeneous Data Sources

In this paper we propose a data acquisition methodology, and a Machine Learning solution for the partially automated evaluation of real estate properties. The novelty and importance of the approach lies in two aspects: (1) when compared to Automated Valuation Models (AVMs) as available to real estate operators, it is highly adaptive and non-parametric, and integrates diverse data sources; (2) when compared to Machine Learning literature that has addressed real estate applications, it is more directly linked to the actual business processes of appraisal companies: in this context prices that are advertised online are normally not the most relevant source of information, while an appraisal document must be proposed by an expert and approved by a validator, possibly with the help of technological tools. We describe a case study using a set of 7988 appraisal documents for residential properties in Turin, Italy. Open data were also used, including location, nearby points of interest, comparable property prices, and the Italian revenue service area code. The observed mean error as measured on an independent test set was around 21 K€, for an average property value of about 190 K€. The AVM described here can help the stakeholders in this process (experts, appraisal company) to provide a reference price to be used by the expert, to allow the appraisal company to validate their evaluations in a faster and cheaper way, to help the expert in listing a set of comparable properties, that need to be included in the appraisal document

A Review of Machine Learning Approaches for Real Estate Valuation

Real estate managers must identify the value for properties in their current market. Traditionally, this involved simple data analysis with adjustments made based on manager’s experience. Given the amount of money currently involved in these decisions, and the complexity and speed at which valuation decisions must be made, machine learning technologies provide a newer alternative for property valuation that could improve upon traditional methods. This study utilizes a systematic literature review methodology to identify published studies from the past two decades where specific machine learning technologies have been applied to the property valuation task. We develop a data, reasoning, usefulness (DRU) framework that provides a set of theoretical and practice-based criteria for a multi-faceted performance assessment for each system. This assessment provides the basis for identifying the current state of research in this domain as well as theoretical and practical implications and directions for future research

Property Appraisal Platform

This document focuses on the internship in the company DeepNeuronic as part of the project ”Property Appraisal Platform”. This project’s main objective was to develop machine learning models capable of inferring real estate prices using machine learning models and a limited set of features capable of describing a property. In order to achieve the objective, the project was divided into two major phases. In the first phase the state of the art was studied and a dataset collection was put together with the aim of creating a comprehensive representation of the real estate market all across the globe. With this dataset collection available, a set of features was chosen according to their relevancy for the main problem. The second phase consisted of the major practical developments, such as the model creation and dataset improvements. With this in mind, the most relevant metrics were chosen and the models were evaluated in the chosen datasets, creating a set of baseline results to improve upon. Afterwards, multiple other experiments were done, tackling different areas of interest that could potentially improve upon the performance of the models. In total, four different models were evaluated and all the experiments improved upon the baseline results. As an highlight, in the last experiment we propose the transformation of the target label from the property price to the ”Coefficient of the price per square meter compared to the suburb average”. Using this new target label, the results obtained were considerably better. All of these experiments were redone in a new more complex dataset, with all of the experiments improving upon the baseline results obtained in this dataset, reinforcing the idea that these experiments can be used even in more complex datasets.Este documento foi criado no âmbito do estágio realizado na empresa DeepNeuronic como parte do projeto ”Plataforma de Avaliação de Propriedades”. O objetivo do mesmo foi desenvolver modelos de aprendizagem automática capazes de avaliar preços do mercado imobiliário usando modelos inteligentes e um conjunto limitado de características capazes de descrever uma propriedade. Para atingir este objetivo o projeto foi dividido em duas partes principais. Na primeira parte foi feito um estudo intensivo do estado da arte, e criada uma coleção de bancos de dados extensiva, representante do mercado imobiliário no mundo inteiro. Com esta coleção disponível, um conjunto de características foram escolhidas de acordo com a sua relevância para o problema em questão. A segunda fase consistiu nos desenvolvimentos práticos principais, envolvendo a criação de modelos e melhorias nos bancos de dados. Para isso foram escolhidas as métricas mais relevantes, e foram avaliados os modelos nos bancos de dados iniciais, criando assim um conjunto de resultados base. Seguidamente, múltiplas experiências foram feitas, abordando diferentes áreas de interesse que podiam potencialmente melhorar os resultados base. No total quatro modelos diferentes foram avaliados e as experiências realizadas todas melhoraram os resultados base obtidos. De especial relevância, na última experiência propomos a transformação do preço da propriedade para uma variável objetivo que pode ser descrita como o ”Coeficiente do preço por metro de área quadrado comparado à média do subúrbio”. Usando esta variável os resultados obtidos foram consideravelmente melhores, estas experiências foram refeitas em um novo banco de dados consideravelmente mais complexo, verificando-se também que todas estas experiências melhoram os resultados obtidos inicialmente, reforçando a ideia que estas experiências podem ser usadas mesmo em bancos de dados mais complexos

Who performs better? AVMs vs hedonic models

Purpose: In the literature there are numerous tests that compare the accuracy of automated valuation models (AVMs). These models first train themselves with price data and property characteristics, then they are tested by measuring their ability to predict prices. Most of them compare the effectiveness of traditional econometric models against the use of machine learning algorithms. Although the latter seem to offer better performance, there is not yet a complete survey of the literature to confirm the hypothesis. Design/methodology/approach: All tests comparing regression analysis and AVMs machine learning on the same data set have been identified. The scores obtained in terms of accuracy were then compared with each other. Findings: Machine learning models are more accurate than traditional regression analysis in their ability to predict value. Nevertheless, many authors point out as their limit their black box nature and their poor inferential abilities. Practical implications: AVMs machine learning offers a huge advantage for all real estate operators who know and can use them. Their use in public policy or litigation can be critical. Originality/value: According to the author, this is the first systematic review that collects all the articles produced on the subject done comparing the results obtained

Using Genetic Algorithms for Real Estate Appraisal

The main aim of this paper is the interpretation of the existing relationship between real estate rental prices and geographical location of housing units in a central urban area of Naples (Santa Lucia and Riviera of Chiaia neighborhoods). Genetic algorithms (GA) are used for this purpose. Also, to verify the reliability of genetic algorithms for real estate appraisals and, at the same time, to show the forecasting potentialities of these techniques in the analysis of housing markets, a multiple regression analysis (MRA) was applied comparing results of GA and MRA

Interpreting Housing Prices with a MultidisciplinaryApproach Based on Nature-Inspired Algorithms and Quantum Computing

Current technology still does not allow the use of quantum computers for broader and individual uses; however, it is possible to simulate some of its potentialities through quantum computing. Quantum computing can be integrated with nature-inspired algorithms to innovatively analyze the dynamics of the real estate market or any other economic phenomenon. With this main aim, this study implements a multidisciplinary approach based on the integration of quantum computing and genetic algorithms to interpret housing prices. Starting from the principles of quantum programming, the work applies genetic algorithms for the marginal price determination of relevant real estate characteristics for a particular segment of Naples’ real estate market. These marginal prices constitute the quantum program inputs to provide, as results, the purchase probabilities corresponding to each real estate characteristic considered. The other main outcomes of this study consist of a comparison of the optimal quantities for each real estate characteristic as determined by the quantum program and the average amounts of the same characteristics but relative to the real estate data sampled, as well as the weights of the same characteristics obtained with the implementation of genetic algorithms. With respect to the current state of the art, this study is among the first regarding the application of quantum computing to interpretation of selling prices in local real estate markets