An Exploration of Neural Networks and Its Application to Real Estate Valuation
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TL;DR
Results do not support previous findings that NNs are a superior tool for appraisal analysis and significant problems were encountered with the NN models: inconsistencies results between packages, inconsistent results between runs of the same package, and long run times.
Abstract
This research applies neural network (NN) technology to real estate appraisal and compares the performance of two NN models in estimating the sales price of residential properties with a traditional multiple regression model. The study is based on 288 sales of homes in Fort Collins, Colorado. Results do not support previous findings that NNs are a superior tool for appraisal analysis. Furthermore, significant problems were encountered with the NN models: inconsistent results between packages, inconsistent results between runs of the same package and long run times. Any appraiser who plans on using this new technology should do so with caution.