Valuation accuracy – the myth, expectation and reality!
African Journal of Economic and Management Studies
ISSN: 2040-0705
Article publication date: 16 September 2013
Abstract
Purpose
This study sought to highlight the conceptual and empirical grounds precluding accuracy in property valuation thereby exposing the limitations of valuation as proxy for actual transaction price and as basis for performance measurement for property investment. As a way of gauging the current level of awareness on the subject of valuation accuracy among Nigerian valuers (estate surveyors/appraisers) and to ascertain their response to the worldwide phenomenon, the study also included an empirical investigation of the perception of principal stakeholders in Lagos, Nigeria.
Design/methodology/approach
For primary data, the study employed questionnaire survey based on cluster sampling technique; while secondary data were sourced from existing literature and results of previous empirical studies.
Findings
“True market value” is unattainable; while valuation rarely identifies its target – the transaction price as surrogate of the “true market value”. In Nigeria, considerable gap exists between expectations and realities in valuation accuracy.
Practical implications
While efforts devoted to improving the accuracy of property valuation are laudable, the study revealed the extent to which such improvement is feasible.
Originality/value
The study suggested measures that would help Nigerian valuers hone their skills for improved level of accuracy; while funds managers and other valuation end-users are cautioned against blind use of valuations as performance yardstick for property investments.
Keywords
Citation
Babawale, G. (2013), "Valuation accuracy – the myth, expectation and reality!", African Journal of Economic and Management Studies, Vol. 4 No. 3, pp. 387-406. https://doi.org/10.1108/AJEMS-11-2011-0106
Publisher
:Emerald Group Publishing Limited
Copyright © 2013, Emerald Group Publishing Limited