Approaches to improving valuation decision-making: a review of the literature
| Date | 13 May 2024 |
| Pages | 27-49 |
| DOI | https://doi.org/10.1108/JPIF-01-2024-0011 |
| Published date | 13 May 2024 |
| Author | Hassan Shuaibu Liman,Abdul-Rasheed Amidu,Deborah Levy |
Approaches to improving valuation
decision-making: a review
of the literature
Hassan Shuaibu Liman
Department of Property, University of Auckland, Auckland, New Zealand and
Department of Estate Management and Valuation,
Federal University of Technology Minna, Minna, Nigeria, and
Abdul-Rasheed Amidu and Deborah Levy
Department of Property, University of Auckland, Auckland, New Zealand
Abstract
Purpose –The complexity of property valuation, coupled with valuers’cognitive limitations, makes some
degree of error inevitable in valuations. However, given the crucial role that valuations play in the efficient
functioning of the economy, there is a need for continuous improvement in the reliability of reported values by
enhancing the quality of the decision-making process. The purpose of this paper is to review previous research
on valuation decision-making, with particular interest in examining the approaches to improving the quality of
valuation decisions and identifying potential areas for further research.
Design/methodology/approach–The paper adopts a narrative approach to review 42 research articles that
were obtained from Scopus and Web of Science databases and through author citation searches.
Findings –Our findings show that existing literature is skewed towards examining the use of technology in
the form of decision support systems (DSS), with limited research attention on non-technological (i.e.
behavioural) approaches to improving the quality of valuation decisions. We summarise the non-technological
approaches and note that much of the discussions on these approaches often appear as recommendations
arising from other studies rather than original investigations in their own rights.
Practical implications –We conclude that studies investigating the effectiveness of the non-technological
approaches to improving valuation decision-making are lacking, providing various avenues for further
research.
Originality/value –This paper presents the first attempt to provide a comprehensive overview of non-
technological approaches to improving the quality of valuation decisions.
Keywords Property valuation, Decision-making, Improving valuation, Behavioural valuation,
Valuer behaviour, Narrative review
Paper type General review
1. Introduction
The valuation profession is central to the efficient functioning of a country’s economy, society
and the environment (Wilkinson et al., 2017). It plays a crucial role in supporting individuals
and businesses in establishing market values of properties for a variety of financial decisions
such as acquisition, disposal and investment performance evaluation (Baum et al., 2000;
Gilbertson and Preston, 2005;Levy and Schuck, 2005). People rarely make vital decisions
regarding their properties without seeking value opinion of such properties from a competent
valuer (Chen and Yu, 2009). Thus, the provision of inaccurate valuation estimates can
adversely impact the users of valuations and the economy at large (Baffour-Awuah and
Gyambi-Yeboah, 2017;Jiang et al., 2013) because of the strong linkage between the real estate
sector and the wider economy as established in the literature (Chiang et al., 2015). Moreover,
following periods of economic downturns, reliable valuations play a major role in restoring
normalcy and public trust to the property market (Coester, 2015).
In most valuation engagements, valuers are required to estimate the property’s market
value, which is expected to be arrived at by going through a rational, analytical decision-
Improving
valuation
decision-
making
27
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1463-578X.htm
Received 31 January 2024
Revised 31 March 2024
Accepted 2 April 2024
Journal of Property Investment &
Finance
Vol. 43 No. 1, 2025
pp. 27-49
© Emerald Publishing Limited
1463-578X
DOI 10.1108/JPIF-01-2024-0011
making process (i.e. the normative valuation process) (Amidu and Boyd, 2018;Whipple,
1991). This process typically comprises instructions, bases of value, methods of valuation and
reporting of the estimated value (Crosby, 2000a). Levy and Schuck (1999) describe the
normative valuation process as a signal processing system in which the valuer filters and
interprets property market information to produce a property’s estimated value. However,
valuation is a relatively complex activity due to the heterogeneous nature of properties, the
infrequency of trading, the challenges in accessing transaction data and the substantial
amount of private information (Levy and Schuck, 2005;Wyatt, 1997). The complexity of
valuation is further complicated by the need for valuers to apply rules and procedures, as well
as exercise professional judgement and reasoning in non-routine, dynamic situations (Amidu
and Boyd, 2018;Klamer et al., 2017,2018). Additionally, the general decision-making process
of valuers is subject to several external constraints that restrict the decision space within
which valuers can operate (Amidu, 2011) and internal constraints such as cognitive
limitations of human information processing (Newell and Simon, 1972). As a result, Diaz
(1990a) and Diaz et al. (2002) argue that effective valuation decision-making may necessitate a
departure from the preferred normative model to a more efficient, heuristic-driven approach,
which may result in sub-optimal or biased valuation decisions (Diaz, 1999).
Although a significant amount of behavioural valuation research has been devoted to
establishing the existence and the possible causes of bias in valuation, there has been
surprisingly little attention on how these biases can be mitigated and how the quality of
valuation decisions can be improved (Abidoye et al., 2021;Lausberg and Dust, 2017). Previous
studies in this regard have largely focused on the use of decision support tools as an approach
to reducing valuation bias and improving valuation quality (e.g. Abidoye and Chan, 2017;
Evans et al., 2019;Lausberg and Dust, 2017;Tidwell and Gallimore, 2014). However, many
researchers have argued that if valuation decisions are to be improved, there is need to
address the potential impact of non-technological, behavioural issues such as the roles of
professional bodies, valuers knowledge, experience and ethical conduct, as well as issues
related to valuation education and professional development (e.g. Abidoye et al., 2021;Ali
et al., 2020;Amidu, 2011;Amidu et al., 2019a;Baffour-Awuah et al., 2017;Baum et al., 2000;
Cheloti and Mooya, 2021,2023;Crosby et al., 2018;Havard, 2001). Yet, investigations into
these non-technological issues appear to be deficient in the literature.
By adopting a narrative approach, this paper reviews existing valuation literature to
examine the approaches for improving valuation decision-making and highlight areas for
future research. We note that this is an area that has not been dealt with in past reviews of the
valuation literature. Previous review papers have focused on studies that investigated the
valuation procedure, bias in valuation or the application of decision support tools in
valuations (e.g. Abidoye and Chan, 2017;Adilieme et al., 2023;Amidu, 2011;Binoy et al., 2022;
Diaz, 1999;Diaz and Hansz, 2002;Geerts et al., 2023;Klamer et al., 2017;Mohammad et al.,
2018;Yiu et al., 2006). Whilst some of these studies have superficially addressed the non-
technological approaches to improving valuation quality, none has provided a
comprehensive review of the issues. The present study, therefore, bridges this gap in the
literature, thereby enhancing our understanding of how valuation decisions might be
improved. The paper also introduces an organising framework for valuation decision-making
research, provides an overview of extant literature in the major research areas and identifies
future research needs. In the next section, we describe how we identified the studies included
in this review.
2. Methods
The approach used in this paper is that of a narrative review, which entails reviewing
literature on a subject area (Grant and Booth, 2009) and providing a quick summary of
JPIF
43,1
28
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