Client Pressure in the Commercial Appraisal Industry: How Prevalent is it?

Kinnard, William N.; Lenk, Margarita M.; Worzala, Elaine

doi:10.1007/978-1-4419-8953-6_17

Cited by 25 publications

(51 citation statements)

References 4 publications

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“…Although the Eagle Star representative was not satisfied with the valuation of the property the transaction proceeded because of the pressure the borrower (an important client) subjected him to. Kinnard et al (1997) found a direct relationship between client size and the likelihood of valuers revising their valuation. If the valuation is important to a client; for example, if a transaction is dependent on a valuation figure, the client may exert more pressure .…”

Section: Causes Of Valuation Variancementioning

confidence: 90%

Variance in commercial property valuations for lending purposes: an empirical study

Bretten¹,

Wyatt

2001

Journal of Property Investment &Amp; Finance

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Investigates the extent and possible causes of variance in property investment valuations for commercial lending purposes within the UK. A literature review was undertaken and a questionnaire survey was circulated to individuals involved in the commercial property valuation process in order to gauge professional opinion. The survey revealed that the main cause of variance was found to be a result of the individual valuer's``behavioural influences''. The survey also found that parties to a valuation instruction widely accept the margin of error principle, the legal manifestation of valuation variance, as a test of negligence.

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Section: Causes Of Valuation Variancementioning

confidence: 90%

Variance in commercial property valuations for lending purposes: an empirical study

Bretten¹,

Wyatt

2001

Journal of Property Investment &Amp; Finance

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“…Yu (2002) found a similar result in a questionnaire survey of appraisers in Singapore. Of residential and commercial appraisers responding to a postal questionnaire in the US posing hypothetical client pressure to revise a valuation, 41% said that they would move their appraisal (see Worzala, 1997 andKinnard, 1998 2 ). Focusing on valuations for loan purposes, in studies of UK and US appraisers based on postal questionnaires, Gallimore and Wolverton investigated whether appraisers reframed the valuation task in response to client feedback so as to validate sale price rather than to estimate Market Value (see Gallimore, 1999 andWolverton, 2000).…”

Section: Previous Researchmentioning

confidence: 99%

Means, motive and opportunity? Disentangling client influence on performance measurement appraisals

Crosby¹,

Lizieri²,

McAllister³

2010

Journal of Property Research

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This paper investigates the extent to which clients were able to influence performance measurement appraisals during the downturn in commercial property markets that began in the UK during the second half of 2007. The sharp change in market sentiment produced speculation that different client categories were attempting to influence their appraisers in different ways. In particular, it was recognised that the requirement for open-ended funds to meet redemptions gave them strong incentives to ensure that their asset values were marked down to market. Using data supplied by Investment Property Databank, we demonstrate that, indeed, unlisted open-ended funds experienced sharper drops in capital values than other fund types in the last quarter of 2007, after the market turning point and at the time when redemptions were at their highest. These differences are statistically significant and cannot simply be explained by differences in portfolio composition. Client influence on appraisal forms one possible explanation of the results observed: the different pressures on fund managers resulting in different appraisal outcomes.

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“…Roberts and Roberts (1991) speculated that client influences may represent the most frequent cause of appraisal judgment variation. Kinnard, Lenk and Worzala (1997) detected actual evidence of client influences. In a survey-delivered experiment, expert appraisers demonstrated a willingness to revise their reported value judgments to accommodate large clients.…”

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confidence: 99%

Valuation Bias in Commercial Appraisal: A Transaction Price Feedback Experiment

Hansz¹,

Díaz

2001

Real Estate Economics

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Experiments were conducted to test the hypothesis that transaction price feedback may bias valuation judgment. Among participating appraisers, evidence of asymmetrical response was found. The group receiving transaction feedback indicating that current judgments were “too low” responded with judgments in subsequent, unrelated valuations that were significantly higher than the group that received no feedback. The response from “too high” feedback was in the expected direction (lower value judgments) but was not significant. Additionally, valuation dispersion of around 10% revealed in these experiments is consistent with studies of valuation variability and may reflect an upper bound of typical commercial appraisal dispersion.

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Client Pressure in the Commercial Appraisal Industry: How Prevalent is it?

Cited by 25 publications

References 4 publications

Variance in commercial property valuations for lending purposes: an empirical study

Variance in commercial property valuations for lending purposes: an empirical study

Means, motive and opportunity? Disentangling client influence on performance measurement appraisals

Valuation Bias in Commercial Appraisal: A Transaction Price Feedback Experiment

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