ABSTRACT
Chapter 2 provides historical perspective to the creation of credit scoring and valuation algorithms in light of the five C’s of credit, followed by early attempts to automate the loan approval decision process. Statistical models which help to assume away the range of property values are addressed, and the direct capitalization and discounted cash flow income approach models are introduced. Whether algorithms are subjective is also discussed. Recent advances in artificial intelligence and machine learning in real estate are discussed. The market vignette for chapter 2 involves the creative process surrounding a fully automated commercial real estate valuation model.
