Barriers in achieving quality valuations: the New Zealand perspective
| Date | 01 October 2024 |
| Pages | 2-26 |
| DOI | https://doi.org/10.1108/JPIF-02-2024-0014 |
| Published date | 01 October 2024 |
| Subject Matter | Property management & built environment,Real estate & property,Property valuation & finance |
| Author | Abdul-Rasheed Amidu,Deborah Levy,Muhammed Bolomope,Hassan Shuaibu Liman |
Barriers in achieving quality
valuations: the New
Zealand perspective
Abdul-Rasheed Amidu and Deborah Levy
Department of Property, University of Auckland, Auckland, New Zealand
Muhammed Bolomope
Department of Real Estate, University of Aberdeen Business School,
Aberdeen, UK, and
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
Abstract
Purpose –To inform ways of improving valuation quality, this study seeks to understand the lived
experiences of practising valuers regarding the challenges of conducting quality valuations.
Design/methodology/approach –This study adopts a qualitative strategy involving 19 semi-structured
interviews with valuers in New Zealand. The interview data were analysed using progressive comparative
analysis and the constant comparative method, which yielded comprehensive and well-founded conclusions.
Findings –The data analysis revealed several challenges that hinder the improvement and maintenance of
valuation quality. These challenges were categorised into nine key areas, covering a wide range of issues, including a
wide scope of practice, lack of experienced valuers, inappropriate use of graduate valuers, stakeholder expectations,
access to relevant information, differing approaches, valuer attitudes and dissatisfaction with compensation.
Practical implications –The findings of this study have the potential to inform the valuation profession
and other stakeholders about the challenges that practising valuers face in conducting quality valuations,
which can ultimately lead to improvements in the valuation process.
Originality/value –This study contributes to the valuation literature, by highlighting the lived experiences
of valuers in terms of the potential and challenges pertaining to valuation quality improvement. This has been
an area that has received limited attention in the past, and an understanding of these issues has the potential to
approach valuation quality in new and innovative ways.
Keywords Valuation quality, Quality improvement, Valuation practice, Qualitative analysis, New Zealand,
Practising valuers
Paper type Research paper
Introduction
Valuation firms are integral to the functioning of economies and provide crucial valuation
opinions that underpin financial and investment decisions for individuals, public organizations
and private businesses (Baum et al., 2000). The significance of valuation extends beyond
economic considerations, as Wilkinson et al. (2017) emphasise its pivotal role in the efficient
functioning of a country’s economy, society and environment. Moreover, reliable valuations are
essential for promoting good governance, transparency in business activities (Awuah and
Gyamfi-Yeboah, 2017) and reinstating trust in property markets (Coester, 2015). Therefore,
valuers must provide quality valuations that uphold the reputation of the valuation profession
and ensure public confidence in the valuation process (Carsberg, 2002;Mallinson, 1994).
JPIF
43,1
2
Funding: This work was supported by The University of Auckland – Business and Economics FRDF
[3717583].
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 2 February 2024
Revised 1 August 2024
Accepted 1 September 2024
Journal of Property Investment &
Finance
Vol. 43 No. 1, 2025
pp. 2-26
© Emerald Publishing Limited
1463-578X
DOI 10.1108/JPIF-02-2024-0014
In a valuation context, quality can be understood objectively in terms of the accuracy of
the valuation outcomes produced in relation to the pre-established margin of error (Crosby
et al., 1998). From this perspective, valuation researchers tend to measure quality based on
the degree of error of a valuation estimate from an acceptable margin of the eventual sale
price and the differences in valuation opinions. For instance, Brown et al. (1998)
demonstrated that only one in five valuers recorded value estimates within a 10% margin
of the eventual sale price, whereas Crosby et al. (1998) concluded that different valuers often
reported value estimates that varied within 10% of each other. McGreal and Taltavull de La
Paz (2012), however, found a lower margin of error in Spain, while Kucharska-Stasiak (2013)
analysed property valuation inaccuracy in Poland and found differences of 24–45% in
commercial and office properties. In Australia, Parker (1998) found that 85% of valuations
were within ±10% accuracy, whereas Newell and Kishore (1998) reported that 65% of
valuations were within ±10% of actual sales prices, with an average absolute variance of
approximately 9.
Most valuations are, however, extremely complex and ill-defined human activities,
making it difficult to understand valuation quality by reference to the outcomes of a
valuation (Amidu and Boyd, 2018). For example, in a comprehensive critique of the margin of
error principle employed by courts to evaluate negligence in valuations, Crosby et al. (1998)
contended that pinpointing the precise margin is inherently elusive, thus advocating for its
exclusion from considerations pertaining to negligent valuations. Beyond the multicomplex
nature of valuation tasks, scholars have also criticized the sole application of the margin of
error as a basis for evaluating valuation quality, due to its limited consideration of market
peculiarities, behavioural tendencies, information accessibility and institutional influences
(Baum et al., 2000;Awuah and Gyamfi-Yeboah, 2017;Amidu et al., 2021). Therefore, in an
effort to deepen the understanding of valuation quality with the view to advancing the
reliability of valuation practices, processes and outcomes, this study explores the wider
literature on land and property markets, by focusing specifically on the institutional theory
and the role of institutions in facilitating and enhancing valuation quality in an increasingly
complex and imperfect market environment.
According to Keogh and D’acy (1999), the institutional theory offers a robust framework
that advances the rational, objective view of market structure and activities by clarifying how
subjective beliefs, norms, traditions and routines are entrenched in the principles that guide
market activities. The theory recognizes that market actors (including valuers) and their
activities are prone to internal and external influences that are not predictable (North, 1990) but
driven by institutions [1] that shape market interactions and outcomes (Bolomope et al., 2021).
Although the foundation of institutional theory can be traced to the foundational works of
scholars such as Veblen (1891),Commons (1907) and Coase (1937), the neo-classical application
of the theory has revolutionized the understanding of sociological, political and economic
factors that influence land and property market transactions (Nee, 1998;Keogh and D’acy,
1999). This study, however, focuses on the sociological institutionalist ideas of Meyer and
Rowan (1977), wherein the concept of institutional myths was explored in explaining the
typical market environment as an intricate hierarchical network of several actors and
organizations. By evaluating the nature of interactions and interdependencies within and
across market hierarchies, organizations and actors, Meyer and Rowan (1977) argued that
market actors and organizations incorporate and reflect the myths of their society in their quest
for survival through their obligations and routines. Therefore, given the significant role of
valuers as major actors in the property market, the institutional theory provides the premise for
a holistic evaluation of diverse influences, emanating from peculiar market laws, beliefs,
culture and tradition that could influence valuation processes and outcomes (Nee, 1998).
By recognizing both rational and non-rational issues that could influence valuation
quality within an operating environment that is governed by formal and informal rules, the
Journal of
Property
Investment &
Finance
3
Get this document and AI-powered insights with a free trial of vLex and Vincent AI
Get Started for FreeStart Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
