Goodbye AVM. Hello AI

According to RICS 2017 report “The Future of Valuations”, AI will either help human valuers, or completely replace them at some point.

Today, machine property valuation is done by AVMs, or Automated Valuation Modelling. AVMs have existed for decades, and at best they do well as “click bait”.

Having successfully built a database containing details of 1.5 million properties in Britain that includes internal information such as area, rooms and energy efficiency as well as external information such as average income, safety, transport and amenities in the neighbourhood; I used Machine Learning to train deep learning AI that learns the market value of properties.

In order to judge how well the AI would perform in the real world, I tested it against properties (not used in training) and plotted the results using residual analysis. In layman terms, residual analysis picks a property with known market value, predicts the value and compares the prediction with the actual value. Residual of 0 means perfect prediction. In this case, most predictions were concentrated around 0 with a few outliers here and there. This is beyond amazing!

Thanks to H2O.ai team for including residual analysis in h2o-3.

By Jaafar

Founder of AccuVal