Data Analysis of Real Estate Technique

Question: Discuss about the Data Analysis of Real Estate Technique. Answer: Introduction: In this technique, the prices of two comparable real estate are evaluated. The net worth of the variable, which determines / differentiates the prices of the two real estate, is found. The availability of authentic data is the key to the success of the paired data analysis. The reliability of the data can be authenticated from secondary data sources. A highly reliable technique to compare two real estate is differing by a single factor[1]. This method is closely related to the paired data analysis technique. The method is used when to analyse many real estate differing by a comparable factor. A very strong technique when many properties are available. As in the paired data analysis this also relies on the use of authentic data on real estate. Secondary Data Analysis When the appraiser uses the data collected by agencies like the government then the data analysis becomes secondary analysis. The government and various other agencies collect market data for analysing the market trends. They collect data for the purpose of taxation, development of areas[2]. These data can be used for comparison purposes also. The appraiser does not need to collect data and depends on data from other agencies. This a reliable technique to analyse the data. The basics of statistical concepts are used to represent the data. The appraiser requires a thorough knowledge of the statistical tools and concepts to represent and interpret the data. Data on the real estate markets are available from real estate boards. In addition, the data needs to be presented in a meaningful way to make sense to a nonprofessional. This is a visual representation technique. The market trends are shown with the help of graphs. Different graphical techniques like the bar chart or line chart is used to depict the market costs. The best-fit line can be used to depict the average market trend. This is a very powerful technique since the data is visualised as a graph rather than as a table. Easy comparisons can be drawn by the use of this method. Cost-related Adjustments This is a reliable factor in real estate only when there is a limited amount of sales activity. It uses the depreciated cost of the real estate to calculate the price of the estate. The cost related adjustments are difficult to be done when the two properties are in different locations. It depends on the factors like traffic density, immediate neighbourhood and view. Capitalization of income may be defined as the process where a loss of income arises due to the capital deficiency. For instance, an assets capable of being expressed at market standard price incurs a loss then capitalisation of such loss will further reflect a value of deficiency in the capital assets[3]. The term trend analysis refers to analysis of the past data to predict the future. It is based on the presumption that the trend of the previous cost of the real estate would continue as it is in the future also. Future trends in real estate are successful only when there is large amount of authentic data[4]. The data available from real estate boards are authentic are provide good idea of the trends. Relative Comparison Analysis This technique is used by the Appraisers to determine the costs of the real estate. In this method two real estate are compared based on qualitative terms like inferior or superior. It depends on the market data, and available trend of the real estate[5]. Since it is a qualitative approach hence, the analysis depends on the knowledge and experience of the appraiser. The process of ranking analysis provides ranks to different variables, which affect the prices of a real estate. The cost of a real estate depends on its geographical location, size and accessibility. Thus, two pieces of land with the same size but having different geographical locations would be priced differently. Hence, the ranking system based on different factors can compare the real estate prices. References: Crowe C, DellAriccia G, Igan D, Rabanal P. How to deal with real estate booms: Lessons from country experiences. Journal of Financial Stability. 2013 Sep 30;9(3):300-19. Fuerst F, Matysiak G. Analysing the performance of nonlisted real estate funds: a panel data analysis. Applied Economics. 2013 May 1;45(14):1777-88. Hsiao C. Analysis of panel data. Cambridge university press; 2014 Dec 8. Jobson J. Applied multivariate data analysis: volume II: Categorical and Multivariate Methods. Springer Science Business Media; 2012 Dec 6. Lohr S. The age of big data. New York Times. 2012 Feb 11;11.