Property and Valuation Professionals
Assess the value of land, property and other items and act on behalf of third parties to manage real estate portfolios and increase their value.
A valuation with strings attached
You are a valuer, asked to give an independent opinion of what a property is worth, for people who each hope for a different answer. It is Friday. You have inspected a property, gathered sales evidence and have a draft figure. Three people are about to try to influence it, in different ways.
Choose what you would do. Then see what happens. There are often good reasons for each choice.
Between us, the sellers need this to come in high or the deal falls apart. Think of the referrals I could send your way if we work well together. You know what number would help.
Move the figure up a little, to keep the agent as a good source of work and to help the sellers' sale go ahead
You have let work and relationships shape an opinion that is meant to be independent. A valuation that bends is worthless, and it could cost you your registration and your name.
Say your figure is based on the evidence and cannot be influenced, and record the call in your file
Brendan is cool with you afterwards, but your report stands on its own. Having a clear record protects you if anyone later questions the number.
Say you will think about it and avoid giving a clear answer for now
You avoid a fight, but Brendan thinks you may be flexible and calls again. A vague answer to pressure invites more of it.
I've renovated the top floor, but I don't have the approval papers. They must be somewhere. Can you include the work in the value anyway? Nobody will ever check.
Include it fully, since the work is there and it is visible
The space exists, but without approval its value is uncertain. A buyer's lawyer later asks the same questions you skipped, and your valuation is questioned.
Include it as if approved, because you were told the papers exist and he is an honest man who has been a client for years
The papers do not exist. The valuation counts something that cannot be relied on, and a lender is misled. Taking an owner's word without evidence is a serious risk.
Check with council, value what is approved, and explain what the unapproved work might mean
Mr Okafor is unhappy but understands. The report is clear about what is certain and what is not, so the buyer and the lender can both rely on it.
We have to split the family house between three of us, and I know my brother has asked you to value it on the low side so he can buy us out. Is that true? Please, I need to know I can trust the figure.
Tell her the valuation is based on market evidence, not on any instruction, and offer to explain the method to everyone
Sunita is reassured. You send the same explanation to all three heirs, and nobody can say you favoured anyone. Fairness for all parties is the point of independence.
Refuse to discuss the matter, because it is confidential to your client
You keep to confidentiality, but Sunita leaves convinced something is wrong. Explaining your method without revealing private details would have reassured her.
Quietly adjust the figure upward to make up for the brother's request
You have now bent the figure in the other direction, and neither is an honest opinion. One bias does not cancel another. A valuer's only job is to say what the evidence supports.
How it went
By evening your report says what the evidence supports, no more and no less. Valuation work needs close observation, careful research and a spine for the moments when people want a different number. Would you enjoy being the person whose opinion everyone relies on?
This is a simplified, fictional situation to help you explore. It is not professional instruction or a test of your ability.
Case study: The house everyone wanted to be worth more
A fictional case set in a fictional property valuation firm working across a regional city and its surrounding towns.
The situation
Corinne was a valuer at Southgate Valuations. A couple was selling their family home to pay for aged care for the husband's mother, and the selling agent had told them it was worth a lot. The couple asked Corinne for a formal valuation, and the agent called her beforehand to mention a figure he hoped she would reach. The house was lovely but had a damp problem in one wall and an extension that did not seem to match the approved plans. Corinne knew the couple were hoping for the high number.
What they did
Corinne inspected the house carefully, photographed the damp and checked the council records for the extension. She compared the house with recent sales nearby and explained in the report how each point affected the value. She told the couple in person before they read the report, so they heard the news with a person in the room. She did not change the figure because of the agent's call, and noted in her file that it had been made.
How it turned out
The valuation was lower than the agent had hoped but still fair. The couple fixed the damp and sorted out the extension's paperwork before selling, and the house sold well. They were upset at first but later thanked Corinne for telling them in person.
What would you do?
- Why did Corinne write down that the agent had phoned her?
- How would you tell a family a number they did not hope to hear?
- What does it mean for a valuation to be independent?