week4

Question 1

establishing sub markets

Answer 1

homogenous grouping of properties into sub-market groups
1. according to geo location e.g. within location propertty type e.g. units

2. Property type

Question 2

how do you estimare the appropriate grouping of properties

Answer 2

sales analysis - look at what type of properties are moving together
local knowledge
trail and error

Question 3

What is an AVM

Answer 3

Automated valuation Model:

- mathematical generated statistical model that undertakes a pre set calculation depending on the type of data input

Question 4

2 types of AVM’s

Answer 4

1.) indexed = examines a prperty that sold in a particular year and then is resold at a later date
this model assues that the property increased by x% year;y, this model does not take into account rennovations or improvements of property

2.) Hedonic - assumes a holistic approach i.e research calculate the value of a property as a function of certain characteristics

Question 5

advantages of AVM modesl

Answer 5

speed
no bias - no opinion
dont include human error
in expensive

Question 6

disadvantages of AVM modesl

Answer 6

no internal inspections
strong reliance on assumptions
A result is not always possible - sometimes no result is given
don’t take into account uniqueness of property

Question 7

land value anaylsis summary

Answer 7

Step 1: Obtain all vacant, or near vacant land sales within the SMG
Step 2: Use scatterplot to demonstrate relationship between sale price and land area within the SMG – reflect “Raw” rate per square metre
Step 3: Identify discrepancies in sale value rates and analyse characteristics/drivers that are the cause, to derive the average land value rate
Step 4: Develop land value rate table ensuring to establish appropriate break points
Step 5: Develop characteristic/driver lookups/matrices