Client influence on valuation: does language matter?. A comparative analysis between Taiwan and Singapore
| Published date | 06 February 2009 |
| Pages | 25-41 |
| DOI | https://doi.org/10.1108/14635780910926658 |
| Date | 06 February 2009 |
| Author | Fong Yao Chen,Shi Ming Yu |
| Subject Matter | Property management & built environment |
Client influence on valuation:
does language matter?
A comparative analysis between Taiwan and
Singapore
Fong Yao Chen
Department of Land Economics, National Chengchi University,
Taipei, Taiwan, and
Shi Ming Yu
Department of Real Estate, National University of Singapore, Singapore
Abstract
Purpose – The purpose of this paper is to attempt to analyze client influence on valuation in both
Taiwan and Singapore. Both countries are chosen because of the similar level of economic
development as well as professionalism amongst valuers. However, although both are
Chinese-dominated by population, the culture and language used are substantially different.
Design/methodology/approach – The study uses a survey questionnaire to sample valuers’
response to client influence in both Taiwan and Singapore. The questionnaire is organized into five
parts: social economic data, client influence situation, potential factors, influence method, and
influence abilities. The survey findings were analyzed using SPSS and subjected to a number of
standard procedures to check for missing values and multivariate normality. Mean difference and
F-test were used to judge whether the valuers in the two countries have significantly different views on
client influence.
Findings – The results show that client influence on valuation practices does exist in both Taiwan
and Singapore. This is despite the differences in the market structures, development background and
modes of doing business. Furthermore, the study finds that the degree and extent of the problem are
different. These differences, as reflected in the differing views and opinions on the causes and factors
leading to client pressure, are largely due to the systemic differences in the two countries, particularly,
in the way businesses are conducted as well as the medium of communication being used.
Originality/value – The paper contributes to the research on client influence on valuation through a
comparative study of two countries with substantially different business environments and language
of communication. These differences seem to have an impact on how valuers view client influence
despite their similar economic, educational and professional backgrounds.
Keywords Real estate, Assetvaluation, Language, Businessenvironment, Taiwan, Singapore
Paper type Research paper
1. Introduction
Investment decision, transaction, taxation, compensation for compulsory acquisitio n,
mortgage, securitization, etc., all require real estate valuation, which can be only
undertaken by licensed and trained valuers who need to be experienced, ethical, and
informed to be able to provide objective and fair real estate valuation.
Most of the literature on real estate valuation focuses on valuation techniques which
reduce valuation error and enhance valuers’ professional skills. Besides valuation
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Client influence
on valuation
25
Received May 2008
Accepted September 2008
Journal of Property Investment &
Finance
Vol. 27 No. 1, 2009
pp. 25-41
qEmerald Group Publishing Limited
1463-578X
DOI 10.1108/14635780910926658
skills, fairness and being ethical are also critical in the undertaking of market
valuations. According to the International Valuation Standard (IVS), valuers should
pursue honest, unbiased, and independent conduct when undertaking valuation duties.
All valuations done should be psychologically and behaviorally independent. Rule 16
of the Real Estate Valuers Act in Taiwan provides that when a valuer is working for
clients on real estate valuations he should be honest and fiduciary, and should not have
undue process to or other irresponsible conduct. The self disciplinary covenant of Real
Estate Appraiser Association of R.O.C. (ROCREAA) also provides that valuers should
be fair, objective and independent when working on real estate valuations, and should
not provide false reports. In Singapore, all licensed appraisers are required to comply
with the code of conduct and ethics of the Singapore Institute of Surveyors and Valuers
(SISV). In fact, in the provision of valuation services worldwide, integrity and fairness
and avoiding unethical practices to maintain a certain level of professional standard in
their conduct is an essential requirement for professionalism amongst valuers.
Issues of objectivity and fairness arise because valuation is not only a science but
also an art. This could allow valuers the opportunity to be influenced by client from
opinion shopping to permitting client to review draft report prior to
formalization.(Fletcher and Diskin, 1994; Kinnard et al., 1997; Levy and Schuck,
1999, 2005; Gallimore and Wolverton, 1997; Chang, 2004; Smith, 2002; Chen, 2006)
This paper attempts to analyze client influence on valuation in both Taiwan and
Singapore. Both countries are chosen because of the similar level of economic
development as well as professionalism amongst valuers. However, although both are
Chinese dominated by population, the culture and language used are substantially
different. In Taiwan, the level of Westernisation is arguably lower given its strong
Chinese domination; in fact, culturally and linguistically, Taiwan in a Chinese society.
Singapore, on the other hand, is a multi-racial society and uses English as its language
for commerce. In terms of the business environment, international surveys have shown
that there is a substantial difference between the two countries. The Transparency
Index (Table I) shows that the Corruption Perceptions Index score for Singapore is 9.3
for 2007, which ranks it equal fourth. Taiwan, on the other hand, has a score of 5.7 and
is ranked 34th. Given these similarities and differences between the two countries, it
would be interesting to examine if indeed these have an impact on valuation practices.
2. Literature review
Brunswik (1956) first uses the lens model of perceptual theory to show that people do
not possess the direct information required to perceive objects in the environme nt.
Applying the model to a market approach, Gallimore and Wolverton, 1997 show that
using transaction prices to estimate market value will lead to bias. Further, Levy and
Schuck (1999) show that when additional information is used, in addition to the
property-specific information and property market information, it will cause bias from
the market value. This additional information includes the effect of prior valuations in
familiar and unfamiliar geographical areas, valuers’ use of heuristics, prior knowledge
and experience, and the selection of comparables. In this context, we also believe that
client influence is additional information as shown in Figure 1.
Fletcher and Diskin (1994) show that client influence existed in mortgage valuation;
borrowers have motivation to maximize loan to value ratio, and lenders threaten
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