• Property Types & Components
  • Valuation Types
  • Data & Data Storage Types
  • Inspection Types
  • Data Mining Methodologies
  • Analysis Methodologies
  • Prediction Methodologies
  • Measurment Methods & Tools
  • Rule Expression Systems

Developing Knowledge Bases For Real Estate

  • Developing Rule Systems
  • Data Mining Techniques
  • Knowledge Databases

Decision-making depends on measurement and valuation of alternative proposals.  Measurement is objectively obtaining values based on standards that are commonly accepted by society. 

Valuation may be solely based on such measurements; for example, monetary profit or cost (as defined by accounting standards), the anticipated rate of growth, and so on.  At other times, valuation is also wholly or partially based on subjective considerations intertwined with the human psyche at both the individual and possibly group level.  This makes the science of valuation particularly interesting and difficult.  People can judge one thing as being more or less valuable than another based on complexities they do not fully understand.  They simply sense that one thing is more valuable or has more appeal than another.  Nonetheless, different individuals may not come to the same judgment in making such comparisons, although the existence of market value indicates that for many things of value, there is enough consensus as to what is more valuable than another,  that market values can be established.  

“Market Value” is what you can get for some good or service at some location and at some point in time, given certain conditions such as being an arms-length transaction not involving force, duress, or deception.   It also depends on other factors such as supply and demand.

A good estimate of market value for a good or service can be determined simply by putting it up for sale on the market, in the appropriate manner and seeing just how much you can sell it for.  However, that is often not possible.  The seller may want to know the value of some good or service before he sells it  This is particularly true for something such as a house that is difficult and expensive to sell,  or possibly unique and expensive.  Or,  it may be imperative to assess the value of some property for inheritance or taxation purposes.

So, there is a problem in assessing the market (or other) value of a good or service, without being able to first sell it.  One way to do that is to find something very similar that has recently sold under the appropriate circumstances.   But throw in market conditions such as supply and demand (and there are many other factors to consider as well).   We see that it is often not easy to come up with a good estimate for market value.

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What does all of this have to do with Knowledge Engineering?  First, valuation is seriously important. In fact, there are regulatory requirements for many tasks such as taxation and lending that can result in punitive or monetary damages if not handled correctly.  It is necessary for the Valuation Engineer to know with certainty whether his work meets prescribed requirements and provides sufficiently accurate results.  He must have an awareness and knowledge that in fact covers rather broad areas.   Second, the methodologies for estimating market value can be quite complex and require the analysis of significant quantities of data using statistics, data mining tools, and many other techniques.    So, the valuation engineer has to step back and consider the knowledge he both uses and develops as a separate entity.  It should be structured so there is no duplication so that it is easy to find the unequivocal answer to any practical question or at least provide the rules, principles, and procedures that will lead to such an answer.  So, ontologies with exact definitions and entity relationships must be developed, sometimes for particular purposes, although there should always be an attempt to generalize as a matter of avoiding duplication, and supporting protocols that are as widely applicable as possible.  Third, – and I emphasize this is not a complete compilation of reasons for knowledge engineering – protocols (also called “guidance”  or “standards”) must be developed and gradually agreed upon so that different engineers with equal degrees of proficiency can arrive at approximately the same conclusions.