Accuracy
How XAI Land Measures and Validates Its AVMs
1. What Does “Accuracy” Mean?
An Automated Valuation Model (AVM) estimates a property’s value based on real market data.
Accuracy means:
How close our estimated value is to the actual transaction price recorded by Ministry of Land, Infrastructure and Transport (MOLIT).
We measure this using internationally recognized statistical standards — not marketing claims.
2. How We Build Our AVMs
Our valuation models are built in four structured steps:
Step 1 – Comprehensive Data Collection
We collect nationwide data including:
- Official MOLIT transaction prices
- Apartments, Villas, Officetels
- Detached & Multi-family homes
- Small commercial buildings (꼬마빌딩)
- Land parcels
- Infrastructure, transit, schools, hospitals
- GIS & environmental data
Step 2 – Data Engineering & Quality Control
Before modeling, we:
- Geocode properties
- Remove outliers
- Merge datasets
- Eliminate duplicates
- Handle missing values
- Construct structured modeling features
Only clean, structured data enters our models.
Step 3 – AI Model Training
We train machine learning models using:
- Sales comparison methodology
- Market-based valuation logic
- Region-specific calibration
Each property type is modeled independently.
Step 4 – Out-of-Sample Validation
We test our models against:
Real MOLIT transaction data the model has never seen before.
This ensures objective performance measurement.
3. How We Measure Accuracy
We use transparent statistical metrics.
1️⃣ MdAPE (Median Absolute Percentage Error)
Measures the median percentage difference between our estimate and actual transaction price.
Lower = More Accurate.
Why median?
It reduces distortion from extreme outliers.
View our latest accuracy results:
- Apartment (아파트), Row house (연립주택), multiplex housing (다세대주택), and officetel (오피스텔)
- Detached homes (단독) · multi-dwelling units (다가구)
2️⃣ PPE @% (Percentage Predicted Error) (±5%, ±10%, ±20%)
PPE@10% shows the percentage of valuations that fall within ±10% of the actual transaction price.
Higher PPE indicates stronger reliability.
We also evaluate additional thresholds (±5%, ±20%) for internal monitoring.
3️⃣ Hit Rate & Record Count
- Hit Rate: % of properties successfully valued
- Record Count: Size of our accessible valuation database
High coverage + high accuracy = reliable infrastructure.
4. Why Accuracy Matters
AVM accuracy is not just a technical metric.
It directly impacts:
- Loan-to-Value (LTV) risk
- Collateral monitoring
- Provisioning sensitivity
- Capital allocation decisions
- Systemic financial stability
Transparent accuracy measurement reduces overvaluation risk and improves responsible lending.
5. Continuous Improvement
Our models are:
- Regularly recalibrated
- Continuously retrained
- Performance-monitored
- Documented for audit review
Accuracy is not a static number.
It is a monitored and managed process.
Our AVM accuracy is directly linked to the strength of our data pipeline and infrastructure.
We continuously improve our data ingestion, cleaning, feature engineering, geocoding, and model retraining workflows to ensure reliability and scalability.
For readers interested in our technical data architecture and pipeline evolution:
🔗 Learn more about our enhanced data pipeline
6. Research & Policy Contribution
XAI Land actively contributes to the development of transparent AVM standards in South Korea.
Our CEO co-authored a peer-reviewed paper published in the Journal of Real Estate Analysis (2024):
“자동가치산정의 정확성 분석 및 투명성 관리 방안”
(An Analysis of the Accuracy of Automated Valuation Model and Transparency Management Plan)
The study:
- Analyzed nearly 20,000 property transactions
- Evaluated AVM performance using MdAPE and PPE@10%
- Demonstrated regional variation in accuracy
- Highlighted the importance of region-specific standards
- Proposed independent third-party validation frameworks
- Discussed AVM’s role in reducing overvaluation risk and preventing financial instability
This research reflects our commitment to measurable standards and transparent validation.
🔗 View Published Paper (JREA, 2024)
7. Institutional Reporting
Detailed regional accuracy reports are available for:
- Banks
- Financial regulators
- Public institutions
- Institutional investors
Contact us to request a full technical accuracy report.