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Appl. Sci. 2018, 8(11), 2321; https://doi.org/10.3390/app8112321

Identifying Real Estate Opportunities Using Machine Learning

1
Computer Science Department, Universidad Carlos III de Madrid, 28911 Leganés, Spain
2
Artificial Intelligence Group, Rentier Token, 28050 Madrid, Spain
3
Finance Department, Colegio Universitario de Estudios Financieros, 28040 Madrid, Spain
*
Author to whom correspondence should be addressed.
Received: 17 October 2018 / Revised: 16 November 2018 / Accepted: 17 November 2018 / Published: 21 November 2018
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Abstract

The real estate market is exposed to many fluctuations in prices because of existing correlations with many variables, some of which cannot be controlled or might even be unknown. Housing prices can increase rapidly (or in some cases, also drop very fast), yet the numerous listings available online where houses are sold or rented are not likely to be updated that often. In some cases, individuals interested in selling a house (or apartment) might include it in some online listing, and forget about updating the price. In other cases, some individuals might be interested in deliberately setting a price below the market price in order to sell the home faster, for various reasons. In this paper, we aim at developing a machine learning application that identifies opportunities in the real estate market in real time, i.e., houses that are listed with a price substantially below the market price. This program can be useful for investors interested in the housing market. We have focused in a use case considering real estate assets located in the Salamanca district in Madrid (Spain) and listed in the most relevant Spanish online site for home sales and rentals. The application is formally implemented as a regression problem that tries to estimate the market price of a house given features retrieved from public online listings. For building this application, we have performed a feature engineering stage in order to discover relevant features that allows for attaining a high predictive performance. Several machine learning algorithms have been tested, including regression trees, k-nearest neighbors, support vector machines and neural networks, identifying advantages and handicaps of each of them. View Full-Text
Keywords: real estate; appraisal; investment; machine learning; artificial intelligence real estate; appraisal; investment; machine learning; artificial intelligence
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).
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Baldominos, A.; Blanco, I.; Moreno, A.J.; Iturrarte, R.; Bernárdez, Ó.; Afonso, C. Identifying Real Estate Opportunities Using Machine Learning. Appl. Sci. 2018, 8, 2321.

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