<abstract xmlns="http://www.w3.org/1999/xhtml"><p>Real estate valuation uses 3 main approaches: income, cost and comparative. When applying the comparative method, correction coefficients based on similar real estate transactions are determined. In practice, the coefficients and similar real estate objects are usually determined by using qualitative approach based on the valuators’ experience. The paper provides an analytical method for the determination of correction coefficient, which limits subjectivity when using the comparative method for valuation. The provided analytical approach also integrates macroeconomic indicators in the calculation process. It also addresses issues when available historical real estate transaction data is limited. A machine learning approach was applied to determine the average price of real estate in the region, with the possibility of using this information to obtain correction coefficients where historical data was unavailable. Alternative research usually focuses on final price estimation of the selected real estate object; however, the valuation standard of Tegova released in 2018 does not allow for applying analytically based approaches for individual real estate object evaluation; these approaches can be used only as a supportive tool for valuators.</p></abstract>

Real estate valuation uses 3 main approaches: income, cost and comparative. When applying the comparative method, correction coefficients based on similar real estate transactions are determined. In practice, the coefficients and similar real estate objects are usually determined by using qualitative approach based on the valuators’ experience. The paper provides an analytical method for the determination of correction coefficient, which limits subjectivity when using the comparative method for valuation. The provided analytical approach also integrates macroeconomic indicators in the calculation process. It also addresses issues when available historical real estate transaction data is limited. A machine learning approach was applied to determine the average price of real estate in the region, with the possibility of using this information to obtain correction coefficients where historical data was unavailable. Alternative research usually focuses on final price estimation of the selected real estate object; however, the valuation standard of Tegova released in 2018 does not allow for applying analytically based approaches for individual real estate object evaluation; these approaches can be used only as a supportive tool for valuators.

Analytical Method for Correction Coefficient Determination for Applying Comparative Method for Real Estate Valuation

Faculty of Informatics, Department of Applied Informatics

Real Estate Management and Valuation

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Real estate valuation uses 3 main approaches: income, cost and comparative. When applying the comparative method, correction coefficients based on similar real...

Analytical Method for Correction Coefficient Determination for Applying Comparative Method for Real Estate Valuation

Publicado en línea: 22 jun 2020

Páginas: 52 - 62

DOI: https://doi.org/10.1515/remav-2020-0015

Palabras clave
Real estate valuation, Analytical models, Machine learning

© 2020 Valentas Gružauskas et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Analytical Method for Correction Coefficient Determination for Applying Comparative Method for Real Estate Valuation

Publicado en línea: 22 jun 2020

Páginas: 52 - 62

DOI: https://doi.org/10.1515/remav-2020-0015

Palabras claveReal estate valuation, Analytical models, Machine learning

© 2020 Valentas Gružauskas et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Palabras clave
Real estate valuation, Analytical models, Machine learning