In the previous parts of this series, we have covered various aspects of the housing market, including primary and non-primary elements, current valuation levels and techniques, the benefits of AI-driven machine learning in property valuations, and the drawbacks of manual or hybrid automated valuation methods in assessment rolls. In this final installment, we will discuss the advantages and disadvantages of the Automated Valuation Modeling (AVM) system and examine how AI can revolutionize it, making it more accurate and leading to a better market solution.
AVM
vs. AI-driven AVM
Author: For over 30 years, Automated Valuation Modeling (AVM) has been
utilized in the public sector for mass property appraisals and in the mortgage
industry for both senior and junior mortgage originations. AVM predominantly
employs multiple regressions to generate property values, resulting in quality
values in the middle of the value curve but not at the short and long ends.
While neural network and optimization techniques are occasionally implemented,
they are not yet widespread in AVM. Can machine learning modeling replace
regression-based AVM and produce more precise values across the value curve? In
that case, what metrics should be used to evaluate the quality of those model
values?
ChatGPT: The answer to the question depends on the specific goals of the AVM system. If accuracy is paramount then yes, machine learning models may be able to replace regression-based AVM and produce more precise values across the value curve. In order to gauge the quality of model values, metrics such as...
* To fully explore the rest of the chapter, I recommend obtaining a copy of my book on Amazon. Here are the links:
Kindle version: https://www.amazon.com/dp/B0C7N9CW8J
Paperback version: https://www.amazon.com/dp/B0C7J4X64P
Hardcover version: https://www.amazon.com/dp/B0C7J7D6VH
PDF version (non-Amazon): https://payhip.com/b/7nTyK
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