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Article
Publication date: 4 December 2020

Pim Klamer, Vincent Gruis and Cok Bakker

The purpose of this paper aims to disclose shared beliefs and understandings about the concept of professionalism amongst Dutch commercial real estate valuers. It examines…

Abstract

Purpose

The purpose of this paper aims to disclose shared beliefs and understandings about the concept of professionalism amongst Dutch commercial real estate valuers. It examines prevailing logics of action in a mature European valuation industry and reflects on the potential influence of these logics on the occurrence of judgement bias in valuation.

Design/methodology/approach

The underlying study adopted a grounded theory approach to facilitate reflexive in-depth interview sessions with 20 experienced valuation professionals in the Netherlands. Emerging data on core categories of professionalism were initially identified and grouped; and subsequently conceptualised into ideal role types of valuers using institutional logics theory.

Findings

Three different ideal types appear to guide Dutch valuation practice: the expert, the service provider and the reporter. The expert emphasises professional standards and technical quality, while the service provider advocates commercial quality and the reporter aims to uphold procedural quality. The authors find that the attention for technical quality associated with the expert role may be at risk of underexposure, fostering concerns about judgement quality and associated bias risks.

Research limitations/implications

The potential impact of both commercial and bureaucratic logics on valuation quality may raise authoritative and educational concerns over judgement bias effects. However, while trends in professionalism may transcend national boundaries, the specifics of local real estate market structures and regulations require replication of results in other markets.

Originality/value

Institutional logics provide an alternative, socio-economic perspective on present-day valuer behaviour that progresses the understanding of the valuer–client relationship, thereby advancing the knowledge base on valuer judgement and client influence. Furthermore, the authors' role typology offers future research opportunities in terms of measurement and explanation of differences.

Details

Property Management, vol. 39 no. 2
Type: Research Article
ISSN: 0263-7472

Keywords

Article
Publication date: 27 September 2011

Dulani Halvitigala, Laurence Murphy and Deborah Levy

This paper aims to examine the experiences of valuers when valuing market dominant and non‐dominant standard lease structures. The research compares the perceptions and…

Abstract

Purpose

This paper aims to examine the experiences of valuers when valuing market dominant and non‐dominant standard lease structures. The research compares the perceptions and approaches of New Zealand valuers when valuing gross and net leases, two standard lease types commonly utilised in the New Zealand commercial property market.

Design/methodology/approach

The study employs a structured survey of 87 commercial valuers practising in Auckland (where net leases dominate) and Wellington (where gross leases dominate) complemented by in‐depth interviews with senior commercial valuers employed by large national/international multidisciplinary real estate companies.

Findings

The results suggest that valuers find the process of valuing standard non‐dominant lease structures more demanding than valuing dominant leases and tend to be comparatively less confident about carrying out valuations of leases with which they are less familiar. This lack of confidence tends to result from the lack of comparable evidence and the added complexity of the valuation process requiring additional valuer expertise and judgement. In addition the study uncovers the adoption of place‐based differential valuation practices that have built up over time between the two centres under study.

Originality/value

The paper contributes to the literature relating to valuer behaviour by revealing that even within one country with the same rules and professional standards different valuation practices may evolve. This study specifically identifies different dominant lease structures as being one of the reasons for these differential valuation practices. The findings also highlight the difficulties perceived by valuers when valuing non‐dominant leases and in turn this may have implications when comparing the valuation outcomes of similar buildings within different markets.

Details

Journal of Property Investment & Finance, vol. 29 no. 6
Type: Research Article
ISSN: 1463-578X

Keywords

Article
Publication date: 11 June 2019

Abdul-Rasheed Amidu, David Boyd and Alirat Olayinka Agboola

The purpose of this paper is to explore the role knowledge plays in expert commercial valuer practice to unpack the way theoretical and experiential knowledge operates in…

Abstract

Purpose

The purpose of this paper is to explore the role knowledge plays in expert commercial valuer practice to unpack the way theoretical and experiential knowledge operates in order to improve practice and education.

Design/methodology/approach

Adopting a cognitivist perspective and identifying meta-reasoning, using a grounded theory methodology, through the study of 11 chartered valuation surveyors practicing in Birmingham, United Kingdom, the distinctive theoretical and experiential knowledge they used was elicited through their in-depth reflection on a valuation task followed by analytical interviews exploring meaning and reasons of actions described.

Findings

The results confirmed that multi-sourced and rich valuation knowledge was a key attribute of a valuation expert. However, the experiential knowledge was not used to undertake the task but to select the methods and knowledge appropriate for the task and context. This meta-reasoning is a key to the speed, accuracy and justification of their practices. Thus, the experience gained from many years of valuation provides expert valuers with meta-reasoning involving knowledge of what, how and when to deal with problems in different circumstances such as the knowledge of markets and handling of clients.

Practical implications

Making meta-reasoning a key aspect of valuation will identify its characteristics more clearly, thus assisting the development of practitioners and providing a new focus for education to advance professional goals.

Originality/value

Meta-reasoning and meta-cognitive knowledge have not been identified as a key to successful valuation practice. This meta-reasoning allows a subtle balance of theory and experience in valuation practice that is appropriate to the situation.

Details

Journal of Property Investment & Finance, vol. 37 no. 6
Type: Research Article
ISSN: 1463-578X

Keywords

Article
Publication date: 18 September 2019

Abdul-Rasheed Amidu, David Boyd and Fernand Gobet

Behavioural studies of valuers have suggested that valuers rely on a number of cognitive strategies involving reasoning and intuition when undertaking a valuation task…

Abstract

Purpose

Behavioural studies of valuers have suggested that valuers rely on a number of cognitive strategies involving reasoning and intuition when undertaking a valuation task. However, there are few studies of the actual reasoning mechanisms in valuation. In other fields, much attention has been paid to forward and backward reasoning, as this shows the choices and decisions that are made in undertaking a complex task. This paper studied this during a valuation task. The purpose of this paper is twofold: first, to develop a methodological approach for empirical research on valuers’ reasoning, and, second, to report expert-novice differences on valuers’ use of forward and backward reasoning during a valuation problem solving.

Design/methodology/approach

The study utilised a verbal protocol analysis (VPA) to elicit think-aloud data from a purposive sample of a group of valuers of different levels of expertise undertaking a commercial-valuation task. Through a content analysis interpretive strategy, the transcripts were analysed into different cognitive segments identifying the forward and backward reasoning strategies.

Findings

The findings showed that valuers accomplished the valuation task by dividing the overall problem into sub-problems. These sub-problems are thereafter solved by integrating available data with existing knowledge by relying more on forward reasoning than backward reasoning. However, there were effects associated with the level of expertise in the way the processes of forward and backward reasoning are used, with the expert and intermediate valuers being more thorough and comprehensive in their reasoning process than the novices.

Research limitations/implications

This study explores the possibility that forward and backward reasoning play an important role in commercial valuation problem solving using a limited sample of valuers. Given this, data cannot be generalised to all valuation practice settings but may motivate future research that examines the effectiveness of forward and backward reasoning in diverse valuation practice settings and develops a holistic model of valuation reasoning.

Practical implications

The findings of this study are applicable to valuation practice. Future training efforts need to evaluate the usefulness of teaching problem solving and explicitly recognise forward and backward reasoning, along with other problem-solving strategies uncovered in this study, as standard training strategies for influencing the quality of valuation decisions.

Originality/value

By adopting VPA, this study employs an insightful and rich dataset which allows an interpretation of thoughts of valuers into cognitive reasoning strategies that provide a deeper level of understanding of how valuers solve valuation problem; this has not been possible in previous related valuation studies.

Details

Property Management, vol. 37 no. 5
Type: Research Article
ISSN: 0263-7472

Keywords

Article
Publication date: 15 June 2010

Robert Schwartz, Avner Wolf and Jacob Paroush

Empirical researchers should recognize that opening and closing prices are not simple reflections of underlying fundamental values, as studies of stock price behavior have…

Abstract

Purpose

Empirical researchers should recognize that opening and closing prices are not simple reflections of underlying fundamental values, as studies of stock price behavior have documented a U‐shaped intra‐day volatility pattern that is a manifestation of noise. While implicit transaction costs and the tactical trading of informed participants are contributing factors, they do not provide a sufficient explanation. The purpose of this paper is to focus on an additional factor – price discovery and present a formulation which allows investors with divergent expectations to respond rationally to each other's valuations, and which implies elevated volatility even when information is common knowledge.

Design/methodology/approach

This is a conceptual paper with empirical implications for the dynamic process of price formation in an equity market. The work is motivated by the well‐documented finding that intra‐day stock prices are excessively volatile, especially at market openings and closings. The paper's theoretical construct shows that the volality accentuation can be attributed to the dynamic process of price discovery.

Findings

The paper's chief finding is that price discovery is a protracted, path‐dependent process in an environment characterized by divergent expectations and adaptive valuations. The protracted, path‐dependent process of price discovery can account for the observed elevation of intra‐day price volatility.

Originality/value

This is an original research paper. The formulation is a novel and innovative treatement of a divergent expectations, adaptive valuations paradigm.

Details

Managerial Finance, vol. 36 no. 7
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 1 October 1999

Deborah Levy and Edward Schuck

The literature on appraisal smoothing and valuer behaviour contains frequent references to the “political pressures” faced by valuers. However, the vast majority of these…

3120

Abstract

The literature on appraisal smoothing and valuer behaviour contains frequent references to the “political pressures” faced by valuers. However, the vast majority of these are either unsubstantiated or based on anecdotal evidence or media reports. Recent research focusing on the issue of pressure similarly suffers from either a lack of formal evidence that particular sources of pressure (e.g. client) actually exist or preconceptions concerning the effect of such pressures. This paper reports on the results of a study which seeks to redress these shortcomings by identifying the non‐methodological factors that affect the values reported to, and ultimately accepted by, clients. The study consists of a series of individual in‐depth interviews with senior New Zealand Registered Valuers addressing the topic of “non‐methodological factors affecting reported values to clients”. Our results indicate that the primary factors affecting the degree to which clients influence valuations, are the type of client, the characteristics of valuers and valuation firms, the purpose of a valuation and the information endowments of clients and valuers.

Details

Journal of Property Investment & Finance, vol. 17 no. 4
Type: Research Article
ISSN: 1463-578X

Keywords

Article
Publication date: 10 July 2018

Abdul-Rasheed Amidu and David Boyd

The purpose of this paper is to identify the core dimensions of problem solving of experts in commercial valuation in order to provide a rich stimulus for managing current…

Abstract

Purpose

The purpose of this paper is to identify the core dimensions of problem solving of experts in commercial valuation in order to provide a rich stimulus for managing current practice and enabling future development.

Design/methodology/approach

The study adopted a cognitive position but emphasised understanding the everyday commercial property valuation practice in a naturalistic context and from the participants’ perspectives. Given this, a grounded theory approach was employed as a research strategy to guide the data collection and surface theoretical interpretations. Data were obtained through in-depth interviews with practicing valuers working in private real estate firms within metropolitan Birmingham, UK.

Findings

The interviews uncover four dimensions of experts’ problem-solving practice in commercial valuation: multidimensional, domain-specific knowledge base; cognitive process that is centred on analysis and reflection; collaborative problem-solving venture with colleagues; and professional practice issues awareness. A conceptual model is proposed which integrates these dimensions enabling a clearer understanding of the nature of valuation work.

Research limitations/implications

This study was designed to be descriptive and theory generating, thus, the findings cannot be generalised as the sample was confined to one city and consists of a small number of senior practicing valuers. Therefore, the findings may not be fully applicable to other practicing valuers, other geographical locations or more widely to other types of property valuation. Nevertheless, the findings provide an important cognitive framework which can be verified by other researchers seeking to examine the practice of expert valuers.

Practical implications

The identification of the core dimensions of expert problem solving in commercial property valuation is shown to have implications for valuation practice, education and continued research. The valuation practice environments need to develop mechanisms to provide time that would enable these multi-dimensions of professional competence to be developed. Further work is needed to expand and refine the model across expert practice in other specialty areas of valuation practice.

Originality/value

This study expands the current understanding of valuation process to areas of expertise that have received less coverage in behavioural valuation literature, that is, the central role of knowledge and cognition and how these are integrated for effective valuation problem solving and decision making.

Details

Journal of Property Investment & Finance, vol. 36 no. 4
Type: Research Article
ISSN: 1463-578X

Keywords

Article
Publication date: 6 April 2012

Tzu‐Chin Lin and Hsiao‐Yen Chang

Despite its popularity in practice, sales comparison is constantly criticized as subjective and even relegated to the least recommended method by some scholars. This paper…

Abstract

Purpose

Despite its popularity in practice, sales comparison is constantly criticized as subjective and even relegated to the least recommended method by some scholars. This paper aims to examine the validity of the above statement.

Design/methodology/approach

A number of statistical techniques have been proposed to improve the objectivity of the sales comparison approach. In contrast, property valuation can also be seen as an exercise of human problem solving with respect to market information. As a result, the approach of a controlled experiment is employed.

Findings

First, experienced appraisers tend to adopt an appraisal process that significantly differs from that specified in legal standards. Second, appraisers have developed a specific‐to‐general information inquiry path. Third, appraisers are likely to stop examining additional sales evidence early when the appraised subject is a typical product. Fourth, appraisers have a tendency to weigh the comparables that come to their attention earlier more heavily than those that come later. Finally, despite the different strategies of information absorption, value variations among appraisers are consistent between different residential properties. The evidence, taken together, strongly suggests that professional appraisers have developed some heuristics or short‐cuts in digesting information relevant to appraisal.

Originality/value

This study is one of the very few that examine appraisers' decision making in Taiwan.

Article
Publication date: 28 June 2011

G.K. Babawale and C.A. Ajayi

Quantitative commentaries in the UK, Australia and other developed economies have generally suggested a high level of valuation accuracy. These important findings need to…

1362

Abstract

Purpose

Quantitative commentaries in the UK, Australia and other developed economies have generally suggested a high level of valuation accuracy. These important findings need to be developed in other parts of the world to facilitate cross‐border property business transactions which globalization promotes. In countries like Nigeria where the property market and valuation practice are just evolving, the one‐to‐one relationship between valuations and transaction prices observed in more developed economies may not necessarily hold. This paper aims to focus on these issues.

Design/methodology/approach

This paper reviews major empirical studies on valuation accuracy with particular reference to the methodology and statistical analyses employed, the results obtained and their limitations. The paper also includes the results of an empirical study on valuation accuracy involving 250 residential properties in metropolitan Lagos, Nigeria. The paper employs error metric and econometric statistical techniques.

Findings

The study reveals, among others, that residential property valuation in Lagos metropolis exhibits inaccuracy below industry's acceptable minimum standards.

Practical implications

The credibility problem engendered by inaccurate valuation has far reaching consequences on the relevance and future of the valuation profession in the study area. Greater collaboration between professionals and academia in research, information procurement and analysis, improvement in valuers' task environment, a well articulated and encompassing mandatory national valuation standards incorporating effective enforcement machinery are some of the suggested remedial measures.

Originality/value

The study draws attention to the potentially grave implications of this result on bank solvency and the attendant negative impact on various aspects of the economy.

Details

Property Management, vol. 29 no. 3
Type: Research Article
ISSN: 0263-7472

Keywords

Article
Publication date: 1 June 2012

Gabriel Kayode Babawale and Modupe Omirin

To address the phenomenon of inaccuracy in real estate valuation successfully, it is imperative to ascertain the sources and how valuers are influenced. The purpose of…

Abstract

Purpose

To address the phenomenon of inaccuracy in real estate valuation successfully, it is imperative to ascertain the sources and how valuers are influenced. The purpose of this paper therefore is to identify and assess both the predictive and relative importance of the factors that significantly influence inaccuracy in residential property valuations in Lagos metropolis.

Design/methodology/approach

Data obtained from 250 firms of Estate Surveyors and Valuers were analyzed by a combination of descriptive and inferential statistics including factor analysis, and correlation/regression analysis.

Findings

The study identified: valuers' knowledge and experience; valuers' approach to valuation; and individual characteristics of valuers and valuation firms, in that order, as having significant influence on valuation accuracy in the study area.

Originality/value

If valuers know the factors that significantly influence inaccuracy and understand how they are affected, it would be possible to reduce the incidence of inaccuracy, together with its potential grave consequences to the housing market in particular, and the economy as a whole.

Details

International Journal of Housing Markets and Analysis, vol. 5 no. 2
Type: Research Article
ISSN: 1753-8270

Keywords

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