Condo Pricing Model helped Estimate Prices with an Error Rate of 5% for a US-based Real Estate Company

Case Study

Condo Pricing Model helped Estimate Prices with an Error Rate of 5% for a US-based Real Estate Company

Business Objective

Our client, a large real estate company based in the US wanted to leverage an analytics model to determine prices for their condos.

The client wanted to re-look at the current pricing, which was not optimal, and build a tool that would help price various condos. Their existing methodology for determining condo prices involved keeping track of similar sales in the region and determining prices intuitively.

Challenges

  • Incorporating the effects of the location of a building, which are not easily quantifiable
  • Numerous correlated factors, such as square footage, number of bedrooms, bathrooms, floor height, patio area, view, etc., have to be considered

Solution Methodology 

  • Performed exploratory data analysis on existing data in line with business requirements
  • Developed a multivariate regression model to estimate sale prices of various condos
  • Estimated weights of features that differentiate the houses from each other
  • Built an Excel UI where the user can select and modify pricing criteria and develop custom reports for trends and outliers

Business Impact

  • The analytical model estimated condo prices within an error rate of 5%
  • The analysis also identified factors that influenced condo prices the most
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