Automated valuation modelling: A specification exercise

Arbeitspapier

Market value predictions for residential properties are important for investment decisions and the risk management of households, banks, and real estate developers. The increased access to market data has spurred the development and application of Automated Valuation Models (AVMs), which can provide appraisals at low cost. We discuss the stages involved when developing an AVM. By reflecting on our experience with md*immo, an AVM from Berlin, Germany, our paper contributes to an area that has not received much attention in the academic literature. In addition to discussing the main stages of AVM development, we examine empirically the statistical model development and validation step. We find that automated outlier removal is important and that a log model performs best, but only if it accounts for the retransformation problem and heteroscedasticity.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SFB 649 Discussion Paper ; No. 2013-046

Classification and Topics

• Classification: Wirtschaft ; Other Spatial Production and Pricing Analysis ; Model Evaluation, Validation, and Selection ; Forecasting Models; Simulation Methods
• Subject: Hedonic regression ; log transformation ; predictive performance

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Schulz, Rainer ; Wersing, Martin ; Werwatz, Axel
• Event: Veröffentlichung
• (who): Humboldt University of Berlin, Collaborative Research Center 649 - Economic Risk
• (where): Berlin
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/91574
• Last update: 10.03.2025, 11:42 AM CET