Page 23 - Regression Guideline

Frequently"Asked"QuesJons"Cont...."
Why&can’t&I&just&select&the&variables&I&think&are&the&best&ones?&A`er&all&I&know&the&area&and&I& have&many&years&experience&doing&appraisals.&I&know&what&macers." There"is"no"quesJon"your"years"of"experience"are"important"for"conducJng"thorough" appraisals."However,"even"the"most"experienced"and"thoughvul"appraiser"can’t"account"for"all" of"the"associaJons"between"a"set"of"property"characterisJcs"(the"predictors)"and"appraised" price."Nor"does"that"same"appraiser"have"the"Jme"to"computaJonally"review"the"influence"of" mulJple"property"characterisJcs"on"the"sale"prices"of"tens"if"not"hundreds"of"other"properJes." Regression"analysis"is"not"a"subsJtute"for"as"much"as"it"is"a"complement"to"your"experience"and" judgment."It"will"help"you"idenJfy"for"a"given"property"the"most"salient"features"for"esJmaJng" a"sale"price,"possibly"including"some"you"might"not"have"thought"were"important"but"which" turn"out"to"be"important"based"on"sales"of"other"properJes"in"the"same"area."For"this"reason,"it" is"beser"to"allow"SAVVI"AnalyJcs'"regression"model"to"mathemaJcally"select"the"features"that" are"most"important"rather"than"excluding"some"potenJally"important"feature(s)"by"deciding"up" front"to"examine"only"a"smaller"group"of"property"characterisJcs."Because"SAVVI’s"program" does"the"work"and"in"only"a"second"or"two,"there"is"nothing"to"lose"and"everything"to"gain"by" examining"a"larger"set"of"variables.""
&
Why&does&the&mulDvariable®ression&model&end&up&including&some&variables&and¬& others?&Isn’t&the&advantage&of&these&models&that&they&examine&the&effects&of&a&larger&group&of& variables&at&the&same&Dme?&What&happened&to&the&variables&that&don’t&show&up&in&the&final& model?&Why&is&the&value&of&some&property&variables&much&higher&than&I&would&expect&and& other&lower?" The"results"of"a"stepwise"mulJvariable"regression"can"be"counterintuiJve."This"leads"to"many" quesJons"about"what"variables"are"in"the"model,"the"value"assigned"to"each,"and"what" variables"have"been"excluded"from"the"model."Specific"examples"of"these"kinds"of"quesJon"we" have"heard"are:""
"
• Why$is$Garage$$64,000$per$stall$and$I$can$have$one$built$for$$23,000?"
• The$subject$has$a$1500$square$foot$basement$and$the$comparables$have$no$basement$and$
yet$no$adjustment$was$made?"
• There$is$an$adjustment$for$basement$finish$and$none$for$basement$square$feet?"
• Basement$square$feet$is$worth$more$than$the$main$square$feet.$How$is$this$possible?"
• There$are$no$adjustments$for$bed$or$bath."
22"