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

Bretten, James; Wyatt, Peter

doi:10.1108/14635780110387619

Cited by 41 publications

(46 citation statements)

References 12 publications

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“…Results of such studies can be found in the Royal Institute of Chartered Surveyors (RICS, 2002), Bretten and Wyatt (2001), Lundstrom and Gustafsson (2006), and Mokrane (2002). Overall, these studies indicate a variance/uncertainty of the order of +/-10% in the assessment of market values.…”

Section: On the Feasibility Of Reliance On Independent Appraisalsmentioning

confidence: 95%

The problem of management bias in accounting estimates: An investor perspective on root causes and solutions

Selling

Nordlund

2015

Business Horizons

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Section: On the Feasibility Of Reliance On Independent Appraisalsmentioning

confidence: 95%

The problem of management bias in accounting estimates: An investor perspective on root causes and solutions

Selling

Nordlund

2015

Business Horizons

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“…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. Hence, client influence provides an additional complication for real estate valuers in their quest for correct value estimates.…”

Section: Professional Autonomy In Real Estate Valuationmentioning

confidence: 99%

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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“…For example, in a study that directly links task complexity and errors, Clement (1999) found a negative relationship between accuracy in analysts' forecast and complexity of the task. Further, the real estate valuation literature suggests that complex valuation tasks have a high tendency to result in excessive variation in valuation opinions (Bretten and Wyatt, 2001;Hiironen et al, 2014). However, the relevant studies are largely descriptive and that the conceptualization of complex valuation tasks remains unclear.…”

Section: Introductionmentioning

confidence: 99%

The role of task complexity in valuation errors analysis in a developing real estate market

Awuah

Gyamfi-Yeboah

2017

Journal of Property Research

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Th e r ol e of t a s k c o m pl exity in v al u a tio n e r r o r s a n aly sis in a d e v elo pi n g r e al e s t a t e m a r k e t B affo u r Awu a h, KG a n d Gy a mfi-Yebo a h, F h t t p:// dx. d oi.o r g/ 1 0. 1 0 8 0/ 0 9 5 9 9 9 1 6. 2 0 1 7. 1 3 1 5 4 4 4 Ti t l eTh e r ol e of t a s k c o m pl exity in v al u a tio n e r r o r s a n aly sis in a d ev elo pi n g r e al e s t a t e m a r k e t A u t h o r s B affo u r Awu a h, KG a n d Gy a mfi-Yebo a h, F Typ e Articl e U RL This ve r sio n is a v ail a bl e a t : h t t p:// u sir.s alfo r d. a c. u k/id/ e p ri n t/ 4 4 5 3 1/ P u b l i s h e d D a t e 2 0 1 7 U SIR is a di git al c oll e c tio n of t h e r e s e a r c h o u t p u t of t h e U niv e r si ty of S alfo r d. W h e r e c o py ri g h t p e r mi t s, full t e x t m a t e ri al h el d in t h e r e p o si to ry is m a d e fr e ely a v ail a bl e o nli n e a n d c a n b e r e a d , d o w nlo a d e d a n d c o pi e d fo r n o nc o m m e r ci al p riv a t e s t u dy o r r e s e a r c h p u r p o s e s . Pl e a s e c h e c k t h e m a n u s c ri p t fo r a n y fu r t h e r c o py ri g h t r e s t ri c tio n s. Fo r m o r e info r m a tio n, in cl u di n g o u r p olicy a n d s u b mi s sio n p r o c e d u r e , pl e a s e c o n t a c t t h e R e p o si to ry Te a m a t: u si r@ s alfo r d. a c. u k .The real estate valuation literature on Sub-Saharan Africa (SSA) shows a growing concern over valuation errors especially wide variation in valuations. Although there have been increased business and investment activities in the last decade or more in the region, these valuation errors pose a challenge to the maturity of SSA real estate markets as valuations promote transparency and support efficient operation of property markets. Based on archival and survey data, as well as insights from the task complexity discourse, this study examines the extent of variations in valuations and the effect of complex valuation tasks on the levels of the variations in Ghana. The study finds high levels of variations in valuation opinions of 33.6% and 63% for the archival and survey data respectively. These levels of variations are substantially higher than have been reported in the literature for advanced markets suggesting that the concerns of valuation errors in SSA may be well grounded. Consistent with theory, it is further established that variations in valuation opinions may be more pronounced in comparatively more complex assignments. These findings have several implications including possible loss of confidence of market players in valuations, heightening of market uncertainty and increase in transaction costs.

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

Cited by 41 publications

References 12 publications

The problem of management bias in accounting estimates: An investor perspective on root causes and solutions

The problem of management bias in accounting estimates: An investor perspective on root causes and solutions

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

The role of task complexity in valuation errors analysis in a developing real estate market

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