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ERES Annual Conference, Delft

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1 ERES Annual Conference, Delft
Automated Valuation Models: A Variety of Projects in Research and Industry ERES Annual Conference, Delft ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

2 Automated Valuation Models - A Variety of Projects in Research and Industry
Content Non-transparancy and heterogeneity of AVM: The problem of various terms, definitions and fields of use Systematization of AVM: A literature-based approach Method related Perspective Process related Perspective Property related Perspective User related Perspective Country related Perspective Conclusion ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

3 Automated Valuation Models - A Variety of Projects in Research and Industry
Non-transparancy and heterogeneity of AVM: The problem of various terms, definitions and fields of use ERES 2017

4 Automated Valuation Models - A Variety of Projects in Research and Industry
Content Non-transparancy and heterogeneity of AVM: The problem of various terms, definitions and fields of use Systematization of AVM: A literature-based approach Method related Perspective Process related Perspective Property related Perspective User related Perspective Country related Perspective Conclusion ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

5 AVM Systematization (Perspectives)
Automated Valuation Models - A Variety of Projects in Research and Industry A number of 6 top-level-perspectives are considered in the AVM systematization approach Scale of Valuation Valuation Methods AVM Systematization (Perspectives) Contries Application Fields Property Type User ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

6 Main perspective of the Dissertation
Automated Valuation Models - A Variety of Projects in Research and Industry 67 relevant sources were analyzed and used for the AVM systematization approach Used Literature Mass Appraisal Academia 35 CAMA Teaching Material 20 Research Paper Portfolio Valuation 6 Monographs AVM 51 Valuation Guidelines Standards Batch Valuation 3 White Paper Practice Time period of sources Number of Sources Subject Subject Number of Sources Time period of sources Main perspective of the Dissertation ERES 2017

7 Literature-based approach: An example of 20 relevant sources
Automated Valuation Models - A Variety of Projects in Research and Industry Literature-based approach: An example of 20 relevant sources ERES 2017

8 Automated Valuation Models - A Variety of Projects in Research and Industry
Content Non-transparancy and heterogeneity of AVM: The problem of various terms, definitions and fields of use Systematization of AVM: A literature-based approach Method related Perspective Process related Perspective Property related Perspective User related Perspective Country related Perspective Conclusion ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

9 Automated Valuation Models - A Variety of Projects in Research and Industry
AVMs are used in valuation processes with different scales: From single valuations to large-scale valuations ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

10 4 general types of modelling are used within the model specification
Automated Valuation Models - A Variety of Projects in Research and Industry 4 general types of modelling are used within the model specification ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

11 Hedonic models continue to be the most common basis for AVM
Automated Valuation Models - A Variety of Projects in Research and Industry Hedonic models continue to be the most common basis for AVM ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

12 Automated Valuation Models - A Variety of Projects in Research and Industry
Nearly 50 different calibration methods are mentioned in the relevant literature ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

13 Nearly 50 different calibration methods
Automated Valuation Models - A Variety of Projects in Research and Industry Nearly 50 different calibration methods are mentioned in the relevant literature ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

14 Automated Valuation Models - A Variety of Projects in Research and Industry
The MRA continues to be the main calibration instrument in an AVM development ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

15 Automated Valuation Models - A Variety of Projects in Research and Industry
A multi-dimensional AVM toolbox can be derived from the empirical analysis AVM model specification Sales Comparison Approach Cost Approach Income Approach Hedonic Price Theory / Methods model calibration Alterntive / Innovative Methods Established /Traditional Methods Hedonic Modells Time Series Analysis Emerging Methods Other Estab. Methods ANN MRA Modelling Spatial Effects Hybrid Systems ERES 2017

16 Automated Valuation Models - A Variety of Projects in Research and Industry
Content Non-transparancy and heterogeneity of AVM: The problem of various terms, definitions and fields of use Systematization of AVM: A literature-based approach Method related Perspective Process related Perspective Property related Perspective User related Perspective Country related Perspective Conclusion ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

17 76 Application fields and cases could be identified
Automated Valuation Models - A Variety of Projects in Research and Industry 76 Application fields and cases could be identified ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

18 AVM supports core processes of real estate management
Automated Valuation Models - A Variety of Projects in Research and Industry AVM supports core processes of real estate management Transaction Other REAM Purposes Financing AVM: Process related Perspective Appraisal process redesign Accounting Insurance Taxation Audit ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

19 AVM most commonly used within core process „Financing“
Automated Valuation Models - A Variety of Projects in Research and Industry AVM most commonly used within core process „Financing“ ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

20 More detailed breakdown of core processes (5 levels)
Automated Valuation Models - A Variety of Projects in Research and Industry More detailed breakdown of core processes (5 levels) ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

21 Automated Valuation Models - A Variety of Projects in Research and Industry
7 out of 10 most common use cases are related to core process „Finance“ ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

22 Automated Valuation Models - A Variety of Projects in Research and Industry
Content Non-transparancy and heterogeneity of AVM: The problem of various terms, definitions and fields of use Systematization of AVM: A literature-based approach Method related Perspective Process related Perspective Property related Perspective User related Perspective Country related Perspective Conclusion ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

23 Automated Valuation Models - A Variety of Projects in Research and Industry
AVMs are currently primarily developed and used for residential properties / portfolios ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

24 Automated Valuation Models - A Variety of Projects in Research and Industry
Content Non-transparancy and heterogeneity of AVM: The problem of various terms, definitions and fields of use Systematization of AVM: A literature-based approach Method related Perspective Process related Perspective Property related Perspective User related Perspective Country related Perspective Conclusion ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

25 35 potential users were assigned to the identified application fields
Automated Valuation Models - A Variety of Projects in Research and Industry 35 potential users were assigned to the identified application fields ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

26 AVM Systematization – User
Automated Valuation Models - A Variety of Projects in Research and Industry AVM Systematization – User ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

27 AVM Systematization – User
Automated Valuation Models - A Variety of Projects in Research and Industry AVM Systematization – User ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

28 Automated Valuation Models - A Variety of Projects in Research and Industry
Content Non-transparancy and heterogeneity of AVM: The problem of various terms, definitions and fields of use Systematization of AVM: A literature-based approach Method related Perspective Process related Perspective Property related Perspective User related Perspective Country related Perspective Conclusion ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

29 Automated Valuation Models - A Variety of Projects in Research and Industry
In total 26 countries from five continents are using AVM for different purposes ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

30 Automated Valuation Models - A Variety of Projects in Research and Industry
Within the US, more than 50% of all identified AVM applications are documented ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

31 All countries with the most applications use AVM for audit
Automated Valuation Models - A Variety of Projects in Research and Industry All countries with the most applications use AVM for audit ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

32 Automated Valuation Models - A Variety of Projects in Research and Industry
Content Non-transparancy and heterogeneity of AVM: The problem of various terms, definitions and fields of use Systematization of AVM: A literature-based approach Method related Perspective Process related Perspective Property related Perspective User related Perspective Country related Perspective Conclusion ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

33 Conclusion - AVM Results
Automated Valuation Models - A Variety of Projects in Research and Industry Conclusion - AVM Results Methods: The HPT / regression continues to be the central model of AVMs. The current research develops and tests innovative, more flexible methods and combines existing methods to hybrid model solutions. Scale: AVM valuations range from the individual valuation over batch/portfolio valuations to mass appraisal Application fields: 76 different application cases were identified and could be assigned to 8 higher-level application fields. The current focus of the AVM application is still on the field of ​​"Financing" and "Audit“ Property Types: AVMs are currently mainly developed and applied for residential real estate purposes . Especially in the field of ​​commercial and special properties, there are just very few documented projects User: 35 potential users were identified and assigned for the identified application purposes. The catalog of users is not exhaustive. Further users are possible. Countries: In total 26 countries from five continents use AVM for different purposes. There is a need for research, in particular, for countries which have a much lower market transparency and have not enough data for the conventional modeling process. ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

34 Thank you for your attention!
Automated Valuation Models - A Variety of Projects in Research and Industry Thank you for your attention! ERES 2017 Andreas Kindt, M.Sc. / Professur Immobilienökonomie / Bauhaus-Universität Weimar /

35 Automated Valuation Models - A Variety of Projects in Research and Industry
Contact Bauhaus-Universität Weimar Department: Real Estate Economics Marienstraße 7a D Weimar PhD-Student: Andreas Kindt M.Sc. Telefon: +49 (0) Supervisor: PD Dr. habil. Steffen Metzner MRICS Telefon: +49 (0) Internet: ERES 2017

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