Valuer's Behavioural Uncertainties in Property Valuation Decision Making

Abstract

Valuation is often said "an art and science". However, it is well known that valuation is more of an "art" than a “science” in which no two valuers could perhaps arrived at the same value. The disparities in the valuation variance pose a point of concern. This research attempts to identify the behavioural uncertainties during valuation decision making process. The finding reveals that there are six (6) elements of valuer's behavioural uncertainties, which include heuristic and bias, ethical conduct, client influence, valuer's experience and knowledge, availability and accuracy of market data, as well as negligence and professionalism.

An Informal Ethics Auditing in Authorized Valuation for Business Sustainability in Romania

“…The results obtained based on the opinion of Romanian valuers regarding clients' negative influence in valuation process are in unison with other studies mentioned in this article [21,[59][60][61]63,64,67,71], which brought attention to this issue.…”

“…Mohammad, Mohd Ali, and Jasimin [64] include the ethical conduct among the "elements of valuer's behavioral uncertainties". They believe that this conduct is necessary because it guarantees "consistency and clarity" in the activity carried out, even if changes occur in certain factors, among which could be "the economic situation or the business practices from one market to another".…”

“…The second hypothesis (H2) is formulated taking into consideration the pressure exerted by the client to influence the authorized evaluation process in his favor, from the perspective of the impact on ensuring objectivity and compliance with professional conduct standards. This phenomenon seems to be a factor that is prevalent in authorized valuation and was highlighted to be present in many countries by authors such as na Ayuthaya and Swierczek [21], Closer [57], Amidu [58], Chen and Yu [59], Crosby, Lizieri, and McAllister [60], na Ayuthaya and Swierczek [21], Nwuba, Egwuatu, and Salawu [61], Achu et al [63], Mohammad, Mohd Ali, and Jasimin [64], and Pilhál [65]. For our understanding, the testing of this hypothesis clarifies whether this aspect is also reported by the valuers in Romania; so far, no similar studies have been undertaken.…”

Effects of Behavioural Uncertainties In Property Valuation

“…This paper conceptualises psychology and behavioural economics in a property valuation discipline, where its literature mainly adopted from behavioural finance and investment of property and stock markets as well as little from property valuation (see Whittle et al, 2014). The literature also spans the recent short review by Mohammad et al, (2018) on six main behavioural factors influencing Valuers' judgement in property valuation, an empirical case study of property valuation variance in Nigeria by Atilola et al, (2019), MacCowan and Orr's (2008) fund management and property disposal and other types of property transactions instances associated with behavioural disciplines, small company's property investment, Salzman and Zwinkels' (2013) corporate and household housing investment and valuation, Ayuthaya and Fredric's (2014) property valuation and investment confidence, and Baum's et al, (2000) valuation bias and client influences on commercial property. Succinctly, despite the various scopes of properties, the main behavioural uncertainties discovered confirm Diaz and Hanz's (2007) four lines of inquiry in behavioural valuation, which emphasise (i) departures from normative models, (ii) comparable sales selection, (iii) valuation biases (Sherin, 2002), and (iv) agency-related impacts or feedback.…”

Volume 17 : 2019 Issue 1

“…Valuation variance is the discrepancy in opinion of values between two or more valuers on the same property (Babawale, 2013;Mohammad, Ali, & Jasimin, 2018). The essence of the display of valuation list is to rectify the discrepancy between the values on the draft valuation list and that which the objectors claim to be the correct values (Bond & Brown, 2017).…”