Duration: 1 May 2016 - 30 April 2020
The real estate valuation sector is currently developing rapidly in the areas of professionalization, certification, supervision and regulation. During the banking crisis, there proved to be a lot of uncertainty about the valuation of property, which often serves as collateral for bank loans, and the role of the valuer during this crisis. Since then, attempts have been made to further professionalize the sector in various ways and to improve the reliability of valuations, often by means of regulations and guidelines.
This research project looks in detail at the implementation of the appraisal process and focuses in particular on the choices and dilemmas that the valuer experiences within a certain environmental dynamic. During the first phase of the study, an international literature review on the phenomenon of ‘judgement bias’ was carried out – the existence of prejudices and other influences which affect valuers in the implementation of the valuation processes. In the following phases, qualitative and quantitative research will be used to study the complexity and dilemmas that occur in the valuation process, as well as the behaviour of valuers in this respect. This research will eventually lead to recommendations in the fields of education and normative professionalization of valuers, in order to improve the quality of valuation processes in this way where possible.
The research is structured as follows:
- Literature research into the phenomenon of judgement bias.
- Exploring the task complexity in the valuation processes through interviews.
- Survey on the self-perception of valuers with regard to a form of professionalization.
- Experiment on how to enhance a form of professionalization among valuers.
Scientific and Educational Relevance
The available research is mostly limited to quantitative studies on the predictive power of valuations of the transaction price. The valuation process, certainly in the Netherlands, is still a ‘black box’. At the international level, research into judgement behaviour has been carried out, but these studies focus on certain countries (US, UK) and are somewhat outdated. Finally, the valuation process has not – or hardly – been previously investigated in a holistic manner. Mainly behavioural experiments have taken place in which it was tested whether trigger X leads to judgement behaviour Y. This research aims to provide a broader perspective on the execution of valuation processes, through which recommendations can be made for the improvement of real estate valuation training and other real estate related trainings.
Professional Practice/Societal Relevance
There is a great deal of instrumental professional development in the valuation sector, such as in the field of regulations, also in the Netherlands. To date, little or no attention has been paid to normative professional development. This can lead to a culture of fine-tuning and ultimately to the erosion of the profession. This research stimulates awareness of the normative side of valuation professionalization and ultimately provides practical tools for its realization.
Klamer, P., Bakker, C., & Gruis, V. (2017). ‘Research bias in judgement bias studies – a systematic review of valuation judgement literature’. Journal of Property Research, 34(4), 285-304.