Clients Perceptions of the Accuracy of Valuations in Lagos, Nigeria

There is currently a worldwide debate on reliability and variation in property capital values. Empirical surveys in Nigeria have followed the general trend of statistical evaluations with a focus on valuers. However, the views of the Nigerian valuers' clients (defined in the paper as the public valuation offices, the mortgage, commercial and merchant lending institutions, and private/public property investors) on valuation accuracy are rarely aired, except where voice is given to their bitter official complaints of negligence to the valuers' professional institution. The paper reasoned that that a survey of clients' perceptions should complement the existing valuer surveys by providing valuer/client comparisons and valuable insights on touchy issues such as maximum acceptable percentage of error of estimates, the efficiency of valuations as a proxy for market prices, as well as inferences on the way forward to more client friendly valuations. The paper accordingly conducted a questionnaire survey of valuers' clients in Lagos metropolis, a metropolis where sixty per cent of Nigerian valuers are based. Results showed that the maximum acceptable margin of error from the viewpoint of clients was in the region of 5%. It was also deduced that a majority of respondents preferred capital value estimates to be presented as a range of likely estimates (with a point estimate showing the most likely estimate in the range), rather than as point estimates alone as is conventionally done. Generally, clients were evenly split on whether valuations were reliable or consistent; however, a slight majority was of the opinion that the valuations generally fell within the 5% acceptable margin of error. The dissenting group of clients pointed to valuations generally falling outside of this margin of error, and traced reasons for this to alleged valuer incapability, particularly in the alleged use of inappropriate - and sometimes conflicting - valuation methods. The paper concluded that the clients of Nigerian valuers expect a higher quality of valuation accuracy, presentation and analysis than their valuers are currently providing, and recommended that valuers embrace client oriented standards - incorporated into a valuation practice manual - as a framework for improving the quality of their valuations.