The Economic Role and Emergence of Professional Valuers in Real Estate Markets

Abstract

Land is a scarce resource. It is usually traded as real estate, an economic good with a market value. Often, this market value is not negotiated simply between the seller and the potential buyer, but is based on an assessment performed by a professional valuer, known as a surveyor or appraiser. This article questions the economic role and the emergence of valuers in real estate markets. An institutionally embedded framework for valuation intermediation is developed that elucidates a multi-tiered imperfect information cascade. First, valuers are understood as middlemen, counteracting information uncertainties regarding product quality, namely real estate herein. An additional constraint is constituted by information asymmetries between the valuer and the contractor. The contribution presents a conceptual integration of theories of price formation (and regulation) and theories of intermediation. Investigating new institutional economics concepts considering the emergence of professional associations and the specific formal and informal regulation of nature-related transactions, the contribution then discusses how the valuation professional with regularizations evolves as a superior institutional response to this cascade of information imperfections.

Rethinking Legal Criteria for Assessing Compensation for Rural Land Expropriation: Towards a European Institutional Framework

“…In Spain, this type of valuation is regulated by Royal Decree 1492/2011 of 24 October, which approved the valuation regulations of Land Law, and by Royal Decree 7/2015 of 30 October. As a result of the practice established in the regulations, asymmetry is generated in the information obtained from the valuation, which is transferred to public decision-making [20][21][22][23][24]. Soil produces market and non-market goods and services.…”

“…The higher the number, the better the environmental and landscape quality or cultural, historical, archaeological and scientific aspects. It is up to the appraiser to justify the weighting coefficient, since the legal text does not provide any method or rule for its calculation and, in this sense, the reflection of Bartke and Schwarze [24], in reference to the role of the appraiser and the information asymmetry, information acquisition, information brokerage and expert knowledge is appropriate. The legal text establishes that the weighting coefficient "t" can reach a maximum value of 7 when the land and urban planning instruments allow a regime of uses and activities other than agricultural or forestry uses and activities that increase the value.…”

Evaluation of the Education and Training of Valuation Surveyors in Uganda

“…West (2014) describes Valuers as 'warriors for the truth: the true client for the appraiser is the public trust.' In other words, a valuation is a generic approach to objectifying the critical dimensions of the quality of an asset from all perspectives (Bartke and Schwarze, 2021). As assessors, Valuers provide an expert assessment of an asset by objectively assessing the various market risks and uncertainties involved.…”

“…As assessors, Valuers provide an expert assessment of an asset by objectively assessing the various market risks and uncertainties involved. Therefore, Valuers are neither required to give their subjective opinion on value nor exploit market opportunities for the benefit of their clients; instead, they are meant to provide a well-founded expert assessment of value, returns, and interests, as well as the prevailing market risks (Bartke and Schwarze, 2021). Under professional, statutory, international, national, or local laws and regulations, a Valuer is usually required to develop appraisal reports subject to the principles, guiding norms of good practice and appraisal methods codified in international and regional standards (IVSC, 2020).…”

“…Despite ongoing debates in some nations over the variations in the nationally recommended methods, Valuers are expected to guide and lead to comparable results (Schnaidt and Sebastian, 2012). Hence, a Valuer is not only an individual professional expert but rather an actor operating in a regulated environment (Ramsey, 2004;Bartke and Schwarze, 2021).…”