A Taxonomic Field Investigation in to Induced Bias in Residential Real Estate Appraisals

Abstract

ABstRACt.A taxonomic approach to field research was developed and utilized to support empirical and experimental research findings into the impact that incentives/pressures to overvalue have on systematic valuation bias. An expected no-bias population was defined and valuation judgments from actual, real-world appraisals were statistically tested against it. The judgments of appraisers presented with no incentive/pressure to over-value were consistent with the no-bias population, while the judgments of appraisers presented with incentive/pressure to over-value were significantly incompatible with the defined no bias population.

Client influence on property valuation in Kenya. Does the valuation environment matter?

“…Only 21 (15.9%) indicated a weak effect, with Overall, the survey results confirm that client influence is a problem in Kenya's valuation profession that contributes to inaccurate valuation outcomes. This finding reinforces the findings of Crosby et al (2018), Diaz and Hansz (2010), and Zhu and Pace (2010), who established that client influence negatively impacts the valuation profession contributing to valuation inaccuracies in the UK and USA. Further, this finding is in line with the findings of Ashaolu and Olaniran (2015) and Amidu et al (2008), who found that client influence is a major problem posing a negative impact on the valuation profession in Nigeria.…”

“…Similarly, Klamer et al (2019) and Achu et al (2015) indicated the existence of client influence in Netherlands and Malaysia, respectively. In the USA, Diaz and Hansz (2010) and Zhu and Pace (2010) established that appraisers succumb to client influence resulting in biased appraisals. Additionally, Ashaolu and Olaniran (2015), Amidu et al (2008) and Oshiobugie et al (2017) found that valuers succumb to client influence contributing to valuation inaccuracies in Nigeria.…”

“…Further, they did not focus on how the valuation environment characterised by information availability affects client influence within the valuation industry. Diaz and Hansz (2010) established that residential appraisers succumb to client influence in the USA. They found that client influence contributes to inflated collateral and a damaged financial system.…”

“…In the same vein, Klamer et al (2019) found that commercial property valuers in Netherlands succumb to client influence. Additionally, Diaz and Hansz (2010) and Achu et al (2015) established that appraisers succumb to client influence in the USA and Malaysia, respectively.…”

“…Studies such as Amidu et al (2008), Ashaolu and Olaniran (2015), Diaz and Hansz (2010), Chen and Yu (2009), Klamer et al (2019), Mwasumbi (2014) and Nwuba et al (2015) have confirmed that valuers succumb to client influence globally, contributing to valuation inaccuracies. According to Cheloti and Mooya (2021), client influence is more pronounced in imperfect and immature property markets like those depicted in Kenya and other developing nations.…”