Appraising Different Houses
It is a nice day here on Avalon which is a city on Catalina Island. I am here to appraise the home of a nice couple that will donate the home to a museum. I am finished with the inspection and the boat to go home leaves in several hours. So I am studying about multiple regression. This is a tool I use that analyses large amounts of data to measure the probability of contributors to value. This is an important tool that gives appraisers objective computerized estimates of what is driving value in an area. Many people think a value estimate (aka appraisal) comes out of an appraiser's head. That might have been the old way of doing things but today we measure and compare what buyers and sellers agree is a value contributor. Since each house is somewhat unique, it is best to find how many buyers and sellers value a home and features. See the regression below, the graph indicates how the price per square foot affects the value. Some sales fall above the line and some below due to other contributors to value such as a view or a pool.
Wait, I think I hear the boat horn that tells me I better get on it or I'll be left behind on the island!!
A Sample Regression