Statistics Final report

INTERIM REPORT 2

Interim Report

Question to be addressed: What is the benefit of using the hedonic price approach as compared to

other conventional methods?

The case business is a real estate company that is looking for a better way to price its

properties. Currently, the firm uses the comparative approach, which entails assigning similar real

estate the same benefits and prices. Realtors use the data of a set of comparable instances to

determine the price of real estate. The price must be adjusted using correction coefficients

generated through the subjective evaluation of property appraisers. Compared to the current

appraisal system, the hedonic price approach has reasonable and quantitative methods that use a

regression model to predict the price. Its main benefit is that it eliminates the human bias that is

prevalent in the conventional methods (Bailey, 2020; Yeh & Tzu-Kuang, 2018).

The data used in this research is sourced from

https://archive.ics.uci.edu/ml/datasets/Real+estate+valuation+data+set#. Since all the variables

are continuous, we will be building a multivariate linear regression analysis. The primary

hypothesis tests test the overall significance of the model in predicting house prices and whether

or not each of the seven IVs has a statistically significant relationship with the DV. Also,

assumptions of multilinear regression analysis – normality, linearity, homogeneity of variances, no

significant outliers, and missing values were examined (Uyanık & Güler, 2013).

INTERIM REPORT 3

References

Bailey, J. (2020). Can Machine Learning Predict the Price of Art at Auction? Harvard Data Science

Review.

Uyanık, G. K., & Güler, G. (2013). A study on multiple linear regression analysis. Procedia-Social

and Behavioral Sciences, 234-240.

Yeh, I.-C., & Tzu-Kuang, H. (2018). Building real estate valuation models with comparative

approach through case-based reasoning. Applied Soft Computing, 260-271.