Automated Procedures Based on Market Comparison Approach in Italy

Abstract

The question about objective valuation is linked on the one hand to the identification of a large number of reliable sale data, on the other hand to the ability to control the critical evaluation protocol. Automating the valuation process, ensured by computerization of real estate data properly detected, provides a concrete answer to the problem of objectivity, allowing a significant control of the subjective component which characterizes the more traditional appraisals. Automatic methods traditionally proposed at international level are often set on multiple regression models, designed to build prediction functions that are valid throughout the study area, calibrating the coefficients on the basis of the real estate data contained on the supporting database. In accordance with the International Valuation Standards, this paper proposes a different approach to automated appraising that, far from the idea of defining appraisal equations generally valid on the basis of regression models, proposes the implementation of an automatic procedure based on the Market Comparison Approach, with the aim to define equations related to the peculiarities of a marketplace in a very circumscribed area. The proposed method has been implemented through the Model Builder tool of ArcGIS and has been tested on a pilot GIS for residential real estate properties.