Client influence on valuation: valuers’ motives to succumb

What is it about?

Valuation is an important aspect of secured lending transaction as it is a way lenders use to mitigate credit risk. However, clients of valuers often attempt to influence valuation outcomes rather than allow valuers to provide objective and unbiased valuation. Valuers sometimes yield to these client pressures and produce biased valuation and they believe that they have motives to do so. This paper ascertained these motives and discussed their justification. The work is focused on Nigeria

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Why is it important?

Property valuations are essential part of credit risk management in banks and mortgage institutions. Their outcomes have to be objective and unbiased for valuations to be effective risk mitigation instrument. Our findings show that valuers yield to clients' pressure and produce biased valuation and they tend to justify such actions and show strong motives they have to yield to pressure. Findings show however that these motives are self-centred and run contrary to valuers' professional ethics and codes of practice. Yielding to pressure to produce biased valuation outcomes is detrimental to the valuation practice, the banking and mortgage industries and the economy at large

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