Can Institutional Investors Bias Real Estate Portfolio Appraisals? Evidence from the Market Downturn

Crosby, Neil; Devaney, Steven; Lizieri, Colin; McAllister, Patrick

doi:10.1007/s10551-015-2953-1

Cited by 35 publications

(60 citation statements)

References 34 publications

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“…The presence of such client influence has been confirmed using qualitative field studies and hedonic regression analyses (i.e. Crosby, Lizieri, & McAllister, 2010;Crosby et al, 1997Crosby et al, , 2015Levy & Schuck, 2005;and Smolen & Hambleton, 1997). Illustratively, Bretten and Wyatt (2001) provided indications of increasing client empowerment in the sector, raising their influence on various parts of the valuation process.…”

Section: Professional Autonomy In Real Estate Valuationmentioning

confidence: 86%

“…The valuation practice seems no exception to this trend, as mortgage lenders rely on valuation reports to mitigate lending risk and to monitor loan covenants. Property valuation is an essential part of risk management in the banking sector (Crosby et al, 2015;Nwuba, Egwuatu, & Salawu, 2015a) However, there may be two problems with this increasing focus on accountability. One problem is that such distracting behaviour is not so much caused by (deliberate) corruptive or fraudulent behaviour, but much rather the result of unconscious judgement bias, for instance, related to information ambiguity.…”

Section: Professional Autonomymentioning

confidence: 99%

“…Academic research on real estate valuers suggests that their advice may not always be independent of client attachment, which is exploited by valuation clients as mortgage banks and investors seek to 'protect' their monetary interests when issuing valuation assignments (Crosby, Devaney, Lizieri, & McAllister, 2015;Freidson, 2001).…”

Section: Introductionmentioning

confidence: 99%

“…No matter how carefully produced, such opinions are based on imperfect market conditions due to real estate's product heterogeneity and a lack of a central market place. This 'fact of life' in real estate valuation creates input uncertainty due to data deficiencies as well as client influence which valuers have to cope with in valuation practice (Crosby et al, 2015;French, 2011). To address this criticism, professional real estate bodies, such as the Royal Institution of Chartered Surveyors (RICS) have put considerable effort into improving valuation process quality and reducing valuer uncertainty (i.e.…”

Section: Introductionmentioning

confidence: 99%

“…To address this criticism, professional real estate bodies, such as the Royal Institution of Chartered Surveyors (RICS) have put considerable effort into improving valuation process quality and reducing valuer uncertainty (i.e. Mallinson Report in 1994 andCarsberg report in 2002) (Crosby, Newell, Matysiak, French, & Rodney, 1997;Crosby et al, 2015). Many of these initiatives involved updating and harmonising valuation standards and procedures (Crosby et al, 1997;Mallinson & French, 2000;McParland, Adair, & McGreal, 2002;Smolen, 1994).…”

Section: Introductionmentioning

confidence: 99%

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Research bias in judgement bias studies – a systematic review of valuation judgement literature

Klamer

Gruis

2017

Journal of Property Research

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a faculty of economics and Management, hu university of applied sciences, utrecht, the netherlands; b faculty of humanities, utrecht university, utrecht, the netherlands; c faculty of education, hu university of applied sciences, utrecht, the netherlands; d faculty of architecture and the Built environment, Delft university of technology, Delft, the netherlands ABSTRACT Valuation judgement bias has been a research topic for several years due to its proclaimed effect on valuation accuracy. However, little is known on the emphasis of literature on judgement bias, with regard to, for instance, research methodologies, research context and robustness of research evidence. A synthesis of available research will establish consistency in the current knowledge base on valuer judgement, identify future research opportunities and support decision-making policy by educational and regulatory stakeholders how to cope with judgement bias. This article therefore, provides a systematic review of empirical research on real estate valuer judgement over the last 30 years. Based on a number of inclusion and exclusion criteria, we have systematically analysed 32 relevant papers on valuation judgement bias. Although we find some consistency in evidence, we also find the underlying research to be biased; the methodology adopted is dominated by a quantitative approach; research context is skewed by timing and origination; and research evidence seems fragmented and needs replication. In order to obtain a deeper understanding of valuation judgement processes and thus extend the current knowledge base, we advocate more use of qualitative research methods and scholars to adopt an interpretative paradigm when studying judgement behaviour.

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