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This viewpoint article explores the transformative capabilities of large language models (LLMs) like the Chat Generative Pre-training Transformer (ChatGPT) within the property valuation industry. It particularly accentuates the pivotal role of prompt engineering in facilitating valuation reporting and advocates for adopting the “Red Book” compliance Chain-of-thought (COT) prompt engineering as a gold standard for generating AI-facilitated valuation reports.

The article offers a high-level examination of the application of LLMs in real estate research, highlighting the essential role of prompt engineering for future advancements in generative AI. It explores the collaborative dynamic between valuers and AI advancements, emphasising the importance of precise instructions and contextual cues in directing LLMs to generate accurate and reproducible valuation outcomes.

Integrating LLMs into property valuation processes paves the way for efficiency improvements and task automation, such as generating reports and drafting contracts. AI-facilitated reports offer unprecedented transparency and elevate client experiences. The fusion of valuer expertise with prompt engineering ensures the reliability and interpretability of valuation reports.

Delineating the types and versions of LLMs used in AI-generated valuation reports encourage the adoption of transparency best practices within the industry. Valuers, as expert prompt engineers, can harness the potential of AI to enhance efficiency, accuracy and transparency in the valuation process, delivering significant benefits to a broad array of stakeholders.

The article elucidates the substantial impact of prompt engineering in leveraging LLMs within the property industry. It underscores the importance of valuers training their unique GPT models, enabling customisation and reproducibility of valuation outputs. The symbiotic relationship between valuers and LLMs is identified as a key driver shaping the future of property valuations.

Market value is an estimation of price in the market. It is value in exchange. The valuer's role is to determine the appropriate approach, the method and use the right model to achieve this aim as best as possible. However, underpinning all valuations and property analysis are valuation standards and definitions. This paper looks at the definition of market value and how some market participants may misunderstand or even misrepresent it. This is particularly true when there is a downturn in the market.

This practice briefing is an overview of the role of market value as a definition of price and how it is often misused by stakeholders in the property market.

This briefing is a review of the valuation definitions clarifying what they mean and what they do not mean.

The role of the valuer in practice is to use the appropriate definition for the task in hand. The understanding of those definitions is central to the valuation process.

This provides guidance on how valuation definitions can be presented to the client in accordance with the International Valuation Standards.

Since the global financial economic crisis hit the world markets in 2007/2008, the role of property valuation has been under greater and greater scrutiny. The process of valuation and its quality assurance has been addressed by the higher prominence of the International Valuation Standards Council (IVSC). This is a significant initiative worldwide. However, there has been little written on the appropriate use of valuation approaches and methods in market valuations. There is now a hierarchy of valuation definitions. In order, there are valuation approaches, valuation methods and, as a subset of the methods, techniques or models. The purpose of this paper is to look at the importance of identifying the appropriate approach to be adopted in market valuations and the methods, techniques and models that should be applied to determine market value.

This practice briefing is an overview of the valuation approaches, methods and models available to the valuer and comments on the appropriateness of valuation each in assessing market value.

This paper reviews the IVSC-recognised approaches and prompts the valuer to be careful with the semantics involved so that they are better placed to provide an unambiguous service to their clients.

The role of the valuer in practice is to identify the appropriate approach for the valuation of the subject property, choose the right method and then apply the correct mathematical model for the valuation task in hand.

This provides guidance on how valuations can be presented to the client in accordance with the International Valuation Standards.

An understanding of uncertainty has always been an integral part of property valuations. No valuation is certain, and the valuer needs to convey to the user of the valuation in the degree of uncertainty pertaining to the market value.

This practice briefing is a short overview of the importance of understanding uncertainty in valuation in normal markets and the particular difficulties now with the material uncertainty created by the COVID-19 pandemic.

This paper discusses how important it is for the valuer and the client to communicate and understand the uncertainty in the market at any point of time. The COVID-19 has had a significant impact on property values and the importance of clarity within valuation reports.

This paper looks at the importance of placing capital and rental value changes due to material uncertainty in valuation reports.

This provides guidance on how professional bodies are advising their members, around the world, on how to report valuations and market value in the context of material uncertainty.

Studies the effects of the downturn in the property market in the late 1980s on banking business practices and the banks′ consequent reassessment of their reliance on loan‐to‐value ratios for lending purposes. Looks at the philosophy underlying the RICS′s publication, in September 1995, of new valuation guidance notes and highlights the importance of the new requirements placed on the valuer.

The purpose of this research is to examine whether valuers consider and interpret intrinsic value elements in a residential property the same way in a familiar location. The price people pay for a complex commodity like residential property is a sum of the utility of various intrinsic and extrinsic characteristics. The skill of the valuer rests in the recognition of value‐enhancing elements in order to arrive at a value for the subject property.

Relevant data for the study were gathered from a controlled‐experiment involving some residential properties and administration of questionnaires backed up with oral interviews on a random sample of 59 valuation firms in metropolitan Lagos, a commercial nerve‐center in the country. The data were analyzed using both descriptive statistics and analysis of variance.

The study showed that there are differences in the means and interpretation of value‐enhancing variables amongst valuation firms sampled. The study, inter alia, concluded that non‐duplicative nature of real estate, differences in the skills and degree of technical competence of the valuation firms including length of practice, absence of a centralized database and lack of valuation practice statements as well as updated guidance notes are the key factors, amongst others, responsible for the variability in the valuers' judgement in the study area.

The paper contributes to the empirical literature in valuation accuracy by establishing the level of interpretative errors in residential property valuations and the key factors responsible for the variability in the valuers' judgement in the study area.

In January 2005, the International Valuation Standards Committee (IVSC) published the International Valuation Guidance Note No. 8 entitled The Cost Approach for Financial Reporting – (DRC). This guidance note provides background to the use of depreciated replacement cost (DRC) in connection with International Valuation Application 1 (IVA 1), Valuation for Financial Reporting and suggests that the valuer reports the result of a DRC valuation as market value subject to the test of adequate profitability or service potential. This suggestion has caused a lot of debate and consternation in the UK where the DRC approach has always been considered as a method of last resort and not a market valuation. However, in continental Europe the cost approach (DRC) is often the principal method of valuation and has always been considered to produce market value. The purpose of this paper is to discuss the impact of this change to valuation practice in the UK.

In this paper, we discuss the concept of market value and its relationship to DRC in an attempt to identify the principal areas of concern in the UK and, through the use of an Italian case study, show how the DRC approach can be adopted as an appropriate method (not basis) for calculating Market Value.

It is probable that most valuers will still provide the DRC valuation using exactly the same calculation as they did before. They are likely to provide the same (relative to the valuation date) figure; the difference is that they will feel less easy about the robustness of that figure

It is argued that the UK market has, for too long, hidden behind DRC being a basis of value that UK valuers now feel uncomfortable in reporting DRC as market value. They are uncertain with the valuation figure. However, this uncertainty can be addressed in other ways and a suggested “solution” to help the valuer overcome their discomfort with the market valuation is proffered.

To describe the application of fair value methodologies to fund operations and emphasize the importance of appropriate valuation procedures.

Discusses the need for appropriate valuation methodologies, describes a recent survey that shows how fair valuation policies and procedures have evolved over time, recommends procedures for adoption of consistent valuation procedures and industry practices, explains recent fund management trends such as the creation of separate valuation committees and the use of third‐party pricing vendors, and warns that valuation is becoming a more frequent subject of SEC examinations.

Concludes that investment companies, private investment companies, boards, and managements are re‐evaluating and updating their valuation policies and procedures, partly in response to increased focus on valuations by the SEC in its examinations.

Provides the results of a useful survey on fair value methodologies and important considerations for fund managers and directors as they review and update their valuation methodologies and procedures.

Discusses the role of the valuation surveyor in the context of a take‐over or merger. Examines a take‐over or merger as an event encased within a corporate transaction or change in property ownership. Warns that the valuer must ensure that proper advice is given to both the shareholders and to the directors just as if they were buying or selling that property, and that the chartered surveyor must understand the role which he or she is accepting and be prepared to work as part of a team. Argues that the surveyor continues to provide truly independent advice, as expected by shareholders and directors.