Does your real estate agent actually know anything?
I was reading this paper recently and it was a good reminder as to why humans are still in real estate. Although, the gap between Automated Valuation Models (AVMs) is narrowing overtime. For now, agents in general can rest easy as when compared to statistical models, they are still better.?
The Paper: Defining spatial housing submarkets: Exploring the case for expert delineated boundaries (Berna Keskin, Craig Watkins, First Published January 6, 2016)
The paper explores the important subject of submarkets and how to generate them. The thinking being, the quality of the submarket selection has an important later bearing on the accuracy of future price prediction. Price prediction (or valuation) being what it's all about.?
Interestingly, experts / agents were no better at generating submarkets. Where they did better than the models was in price prediction.?
“Although the results do not provide comprehensive evidence that expert-defined submarkets are superior to the specifications derived by using alternative methods to partition our data, the expert-defined model does perform well in terms of predictive accuracy.”
So for now, experts / agents remain a more accurate way of pricing property in general. Or at least our agent counterparts in Istanbul.