Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/91574
Authors: 
Schulz, Rainer
Wersing, Martin
Werwatz, Axel
Year of Publication: 
2013
Series/Report no.: 
SFB 649 Discussion Paper 2013-046
Abstract: 
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.
Subjects: 
Hedonic regression
log transformation
predictive performance
JEL: 
R32
C52
C53
Document Type: 
Working Paper

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