Page 15 - Regression Guideline

"
In"this"hypotheJcal"scenario,"the"nonP independence"of"bedrooms"and"gross"living" area"must"be"taken"into"account"when" considering"how"this"influences"price"as" shown"in"the"diagram"to"the"right."A" mulJvariable"(but"not"bivariate)"regression" model"will"take"into"account"the"nonP independence"of"(higher"order"correlaJons" in"staJsJcal"parlance)"the"property" characterisJcs"when"esJmaJng"the" appraised"value"of"a"property."The" importance"of"the"concept"of"nonP independence"of"property"characterisJcs" becomes"clearer"when"we"next"consider" what"kind"of"regression"model"is"opJmum" for"property"appraisal"and"how"many" predictors"should"be"included"in"the"final" model."
"
""
""""""""""
Gross living area
"MulJlinear"Regression""
Sidebar:&Why&are&some&predictors&le`&out&of&the&model&and&what&does&non4 independence&of&predictors&mean&exactly?&
"
Whether"the"final"model"includes"only"two"or"as"many"as"ten"predictors,"the"staJsJcal"process" used"by"SAVVI"insures"that"these"are"the"strongest"set"of"predictors"for"esJmaJng"the"property" value."In"short,"you"won’t"need"to"make"further"mulJple"adjustments"to"the"model."SAVVI" analyJcs"has"already""given"you"the"best"one"by"automaJng"the"complex"processes"of"data"" modeling"and"staJsJcal"analysis"into"a"fast"and"easy"way"to""meet"today’s"requirements.""
"
As"an"appraiser,"you"know"that"no"two"properJes"are"exactly"the"same"and"that"they"differ"from" each"other"in"mulJple"ways."It"makes"sense"then"that"in"esJmaJng"a"given"property’s"value,"you" consider"the"mulJple"ways"the"property"you"are"appraising"is"different"from"comparable" properJes."What"is"less"intuiJve"and"much"more"difficult"to"esJmate"on"your"own"is"the"degree" to"which"the"mulJple"property"characterisJcs"you"are"considering"are"themselves"associated"with" each"other"(i.e.,"nonPindependent)"as"you"are"esJmaJng"their"associaJon"with"sales"price."That" is,"considered"alone,"the"number"of"bedrooms,"lot"size,"and"gross"living"area"might"each"account" for"some"of"the"difference"in"the"sold"prices"of"comparable"properJes.""However,"it"is"possible" that"number"of"bedrooms"is"not"completely"independent"of"gross"living"area"when"secng"a"price." Larger"properJes"could"tend"to"have"more"bedrooms"and"vice"versa."On"the"other"hand,"lot"size" could"very"well"be"largely"independent"of"both"gross"living"area"and"bedrooms."""
Lot size
Sold price
Bedroom
14"