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How to make a return on real estate investment.

Fincase is a rapidly growing startup using Artificial Intelligence and Machine Learning for transforming real estate appraisal market. Fincase's innovative service Scoring  Value Analyses analyses big data and return on investing in property. Dmitry Tsyplakov's interview on SVA function and new project for real estate market.

What is Scoring Value Analyses ? 

Scoring value analyses -is the system that calculates the value of real estate – commercial objects and residential property. Property market is huge and all of its units should be assessed in order to know the market value and make a profit from investment in facilities afterwards. Now we are evaluating simple objects, but we are planning to add complex algorithms from the appraisal practice - a cost approach or discounting cash flows. This is what large consulting companies Big 4, Ernst & Young, Deloitte, KPMG practice 

How is SAS useful? 
SVA defines property value based on standard evaluation algorithms, which we upgraded. Appraisal practice in Russia has existed since about 1991, this is the time when a document appeared for the first time at the state level and consolidated the norms of appraisal practice. We took them as a basis, complicated the algorithms, applied machine learning and created a service that, without human intervention, allows us to estimate the value of real estate and excludes the occurrence of a human factor, that is, a possibility of error. 

What processes does SVA automate? 

Let's deal with the main categories. Appraisal is a branch of consulting, appraisers are people who have expertise in real estate and economics. Appraisers' work starts with the selection on the CIAN or other marketplaces with listings, which can be used as analogs because the assessment involves the selection and adjustment facilities. This is the essence of the comparative approach - the most common in the world, since the market is the best reference point. If you use other algorithms, you can face the fact that the market lives its own life and you cannot focus on anything other than the market. If there is a price list for a certain product or service on the market now, it consists of a large number of factors. 

Appraisers select the most similar properties on the market, then, using coefficients and adjustments, they try to bring analogues to their real estate object according to the given characteristics. And then the average value is displayed based on analogs and new adjusted values. After that, according to the legislation, the appraiser needs to generate an appraisal report - a conclusion on the main characteristics and prices in the volume of 60-80 pages. The report contains data on analogs, how they got the cost, who made the calculations. It takes several hours, due to monotony, evaluators often make mistakes, this negatively affects the quality of the evaluation. 

Our service is built according to the same logic, only automation allows us to avoid mistakes. We use traditional methods, proven by decades of evaluation practices, as well as adding machine learning algorithms that case is, to evaluation at times better and faster. We use traditional methods, proven by decades of evaluation practices, as well as adding machine learning algorithms that case is, to evaluation at times better and faster.

What companies need SVA?

All spheres who are in varying degrees connected with real estate - banks, development companies, appraisers, brokers, realtors.
Brokers and appraisers working with the Moscow region can independently estimate the value of real estate in the capital with a deviation of 15-20%, and if the task is to evaluate a villa in Spain, the error will be 100 or 200%. Our algorithms exclude such a possibility - we always have a base, we rely on it, adjustments allow us to give an accurate market estimate.
Banks constantly work with real estate - they often give mortgages secured by real estate, and objects constantly need to be evaluated. Our service does it in a few seconds.
For evaluators, SVA is a time-saving resource plus a reliable indicator of performance accuracy.
Also, all owners of real estate objects are potential consumers , since at one stage or another it is necessary to make an appraisal of real estate. Our clients are not only businesses and departments, we have expanded our work to the B2C sector. If you have an apartment and you need to know the market value, you do not know who to ask, you do not want to overpay for a manual evaluation, you can subscribe to our service.

What are the prospects for the international market? 

My team and I have developed a new product for the US market. Analysis of real estate appraisal services used by American brokers and developers showed that a new product is needed that will assess the attractiveness of real estate investments. 
When creating a product, we conducted research and found out what people are guided by when buying real estate. Despite the importance of the factors of area, repair, comfort, year of construction, the main factor was the infrastructure - the ecosystem of the district. 
The launch of the service is planned for autumn 2020 with the appearance of the first users. We'll announce release soon and disclose all details about the project. 

Dmitry Tsyplakov, CPO of Fincase. 
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