Valuation accuracy – the myth, expectation and reality!

Purpose - – This study sought to highlight the conceptual and empirical grounds precluding accuracy in property valuation thereby exposing the limitations of valuation as proxy for actual transaction price and as basis for performance measurement for property investment. As a way of gauging the current level of awareness on the subject of valuation accuracy among Nigerian valuers (estate surveyors/appraisers) and to ascertain their response to the worldwide phenomenon, the study also included an empirical investigation of the perception of principal stakeholders in Lagos, Nigeria. Design/methodology/approach - – For primary data, the study employed questionnaire survey based on cluster sampling technique; while secondary data were sourced from existing literature and results of previous empirical studies. Findings - – “True market value” is unattainable; while valuation rarely identifies its target – the transaction price as surrogate of the “true market value”. In Nigeria, considerable gap exists between expectations and realities in valuation accuracy. Practical implications - – While efforts devoted to improving the accuracy of property valuation are laudable, the study revealed the extent to which such improvement is feasible. Originality/value - – The study suggested measures that would help Nigerian valuers hone their skills for improved level of accuracy; while funds managers and other valuation end-users are cautioned against blind use of valuations as performance yardstick for property investments.