Goodwill hunting: Developing a methodology for identifying and incorporating goodwill into residential land valuations

Abstract

Purpose

The purpose of this paper is to add to the academic discourse by developing a methodology by which a block of land’s goodwill, or lack of goodwill, can be factored into its valuation.

Design/methodology/approach

The research was undertaken utilising a mixed-methods approach, which involved doctrinal research, together with qualitative and quantitative analysis of the impact of neighbourhood disputes on real property value. The disputes engaged with for exemplar purposes were those of tree disputes resolved by QCAT order.

Findings

A dispute can adversely affect a property’s goodwill, which can impact both its saleability and value.

Research limitations/implications

Due to the sensitive nature of the valuation process and the potential negative impact that any identification of a property may have on its value, it was not appropriate to identify any properties specifically or the area in which these are located. Further, as regards the available details of disputes, the authors were only able to engage with disputes for which an order existed.

Practical implications

The methodology developed can be applied to other real property interests, for example, lots in freehold retirement village complexes or those within other strata title schemes of either residential or commercial use.

Social implications

As the number of neighbourhood disputes throughout Australia grows, addressing the impact that a dispute has for property value is a concern relevant to all valuers and owners.

Originality/value

The authors add to the academic discourse by developing a methodology by which a property’s goodwill, or lack of goodwill, can be factored into its valuation.

Citation

Cradduck, L. and Warren, C.M.J. (2019), "Goodwill hunting: Developing a methodology for identifying and incorporating goodwill into residential land valuations", Property Management, Vol. 37 No. 5, pp. 597-609. https://doi.org/10.1108/PM-11-2018-0057