Professionalisation of commercial valuers of real estate

Group of researchers conferring
During the banking crisis of 2008, great uncertainty arose about the valuation of real estate by valuers in the Netherlands. Have valuers been doing a proper job? Can we, as a society, assume they uphold values of objectivity and independence amidst commercial settings and for profit driven clients? After all, market competition grants clients a certain authority vis-à-vis professionals such as valuers. Legislation concerning the valuation practice has become sharpened in the aftermath of the banking crisis to reinforce neutrality in valuation judgements. But is the use of such an instrument considered effective? 
Scientifically, little is known about the way in which valuers do their decision-making. How does client orientation affect professional judgement? 

Objective

Valuation work mainly exists of interpretation, passing judgment, and decision-making. The valuer is therefore faced with many choices during a value assessment that affect the quality of value assessments.If we aim to stimulate the professionalism of valuers, i.e. reinforce the autonomy of valuers in view of client pressure, it is important to gain insight into the underlying dynamics of the valuation process: what explains how the valuer operates? Which patterns or interests are based thereupon? Pim Klamer’s PhD research has as main objective to unravel the valuation process and how client orientation may affect valuer’s judgement behaviour. Such insights will help to make recommendations to stimulate professionalism, for example through valuation-related education.

Results

In light of the above-mentioned approach, the following articles are published:

1. A literature review on the phenomenon of ‘judgement bias’, being the existence of prejudices and other influences that affect how valuers judge valuation processes. Its results point to a diffuse picture of judgement bias manifestation by valuers as portrayed by a 30-year review of international studies. 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

2. Examination of task complexity in valuation processes through a grounded theoretical approach and in-depth interviews. Valuers interpret task complexity in a broad sense, taking into account the contextual factors such as the client and his interests. Different types of valuers know different types of task environments and, therefore, have different approach to task complexity within their jobs. The task environment (for example customer interests) can thus be of relevance during the professional judgement of valuers. Pim Klamer, Cok Bakker & Vincent Gruis (2018) 'Complexity in valuation practice: an inquiry into valuers’ perceptions of task complexity in the Dutch real estate market', Journal of Property Research', 35:3, 209-233. Klamer, P., Bakker, C., & Gruis, V. (2019). 'Complexity in valuation practice: perceptions of tax complexity in the Dutch real estate market'. Real Estate Research Quarterly (Dutch).

3. Case-oriented survey on the degree of client attachment in information verification of valuers. Client attachment is significant with valuers who have letting agent experience and/or represent an board level function within their organisation. Client attachment, therefore, may effect the neutrality of judgement of valuers. Klamer, P., Gruis, V. & Bakker, C., (2019). 'How client attachment affects information verification in commercial valuation practice', Journal of Property Investment and Finance.

4. Analysis of the ideal types of valuers through grounded theoretical approach and in-depth interviews. Valuers aim to live up to the standards of three valuation-ideal types in their work, in order to meet the interests of different stakeholders. These ideal types are the Expert, the Service Provider, and the Reporter. The struggle of balancing all roles, amidst time pressure and deadlines, may harm manifestation of the Expert role.

5. Questionnaire survey involving role orientation of Dutch commercial valuation professionals. While role orientation generally reflects a balance of all three ideals (i.e. Expert, Service Provider and Reporter), some type of valuers put significantly more emphasis on service provision and reporting than do others. Most notably, this includes valuers that hold substantial work experience, run a single service practice; or work in large corporate firms.

Duration

01 May 2016 - 30 April 2020

Approach

The research is structured as follows:
• A literature review on the phenomenon of ‘judgement bias’, being the existence of prejudices and other influences that affect how valuers judge valuation processes
• Examination of task complexity in valuation processes through a grounded theoretical approach and in-depth interviews
• Case-oriented survey on the degree of client attachment in information verification of valuers
• Qualitative analysis on ideal types of roles in valuation through grounded theoretical approach and in-depth interviews.
• Quantitative analysis on role-orientation of valuers through an online questionnaire survey

HU researchers involved in the research

  • Pim Klamer
    • Researcher
    • Research groups: Normative Professionalisation
  • Cok Bakker lector NP
    Cok Bakker
    • Professor
    • Research groups: Normative Professionalisation

Related research groups

Collaboration with knowledge partners

This PhD research is being conducted in collaboration with the Academie voor Vastgoed, a subsidiary of the Nederlandse Vereniging van Makelaars en Taxateurs o.g. (NVM).

Degree programmes

  • MSc Urban and Area Development
  • BSc Facility Management
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Would you like to collaborate or do you have any questions?

Pim Klamer

  • Researcher
  • Research group: Normative Professionalisation