Usage of Major Heuristics in Property Investment Valuation in Nigeria

The study addressed the gap in research on major heuristics in property valuation hitherto confined to anchoring and adjustment at the neglect of the other three: availability; representative and positivity. The aim was to investigate usage of all types amongst Nigerian valuers. The study undertook cross-sectional questionnaire survey of 159 of the 270 Head Offices of Estate Surveying and Valuation firms in Lagos Metropolis, while 29 and 30 questionnaire were distributed to the Head Offices of the entire Estate Surveying and Valuation Firms in Abuja and Port-Harcourt respectively. Statistical tools such as frequency distribution tables and relative importance indices (RII) were employed. Results revealed that apart from anchoring and adjustment (RII =2.359), valuers also make recourse to availability (frequency counts for various parameters: outgoings, 71.9%; rental evidence, 55.7%; and yield, 63.5%), representative (RII for various parameters: different locations in neighbourhood 1.80; extra bathroom and toilet, 2.012; disparate plot size, 1.63; larger parking space, 1.66; extra garrage, 2.1; high quality floor/wall finishes, 1.71) and positivity (frequency count of above 80%). The results were above average hence the researchers confirmed the usage of the other three heuristics. The study emphasised need for focus in other major heuristics for more holistic researc

Client Influence on Valuation:Its Effect on Lagging of Commercial Property Investments

Behaviourial issues have been attributed as one of the factors that result to the inability of property values to predict the market. Levy and Schuck (1998) having looked at the deductive, cognitive and holistic models to these behaviourial issues criticised the first two models for their failure in capturing the complexities in the valuation process within the commercial setting. This paper thereby studied clients’ influence, one of these behaviourial issues, with respect to its effect on lagging of commercial property investment in Lagos Metropolis, a situation believed to have captured the complexities in the valuation process within the commercial setting. The study involved the strategic random sampling of 95 practising Estate Surveying firms in the study area. By employing the use of frequency distribution and weighted arithmetic mean, a 46% increase was discovered in valuation lagging. The Nigerian Institution of Estate Surveyors nad Valuers are thereby called to strengthen her disciplinary committees in order to checkmate activities of her members particularly as it relates to clients’ influence in order to safeguard the credence of her noble professio

Relative Level of Occurrence of the Principal Heuristics in Nigeria Property Valuation

The neglect of the other principal heuristics namely avaialability, representative and positivity in real estate behaviourial property research as against the exclusive focus on anchoring and adjustment heuristics invariably results to a lopsided research. This work studied the four principal heuristics in property behaviourial property valutaion in a bid to discovering its relative level of occurrence. The study adopted a cross-sectional questionnaire survey approach of 159 of the 270 Head Offices of Estate Surveying and Valuation firms in Lagos Metropolis, while 29 and 30 questionnaire were distributed to the Head Offices of the entire Estate Surveying and Valuation Firms in Abuja and Port-Harcourt respectively. The data gotten was analyzed with the aid of Statistical Package for the Social Sciences first using frequency distributions/means and the data so analyzed was further analyzed using maximum and minimum values, means/standard deviations and ultimately ranking of such means. The result revealed that respondents use the various principal heuristics in this decreasing order of magnitude: availability heuristics (26.77%), anchoring and adjustment heuristics (18.62%); representative heuristics (15.63%) and least of all positivity heuristics (10.41%). The authors thereby opined that emphasis be placed more on availability heuristics research particularly as usage of heuristcis (anchoring and adjustment) has been seen to influence valuation inconsistency/accurac

The Accuracy of Nigerian Property Valuations Revisited

There have been increasing criticisms of the ability of Nigerian valuers to undertake investment valuations in a reliable and consistent manner. Prior empirical studies that have tended to investigate this claim have however been criticized as the valuers employed in simulated valuations of recently sold properties were not paid and did not inspect the properties. This study sought to examine whether valuers who carried out fully paid and fully inspected valuation assignments were able to do so in a reliable and consistent manner. To achieve this aim, the paper employed secondary data of the 131 Federal Government privatised properties which were valued by Estate surveyors and valuers before being sold. Data so obtained were analysed with the use of standard deviation and regression analysis. The results confirm that property valuations, even where they are fully paid for and fully inspected do not yet meet standards of reliability and consistency. The study concluded that there is the need for the valuation profession to enforce the maximum margin of error, enshrine maximum acceptable margin of error of +/-10.2% in the future Valuation Guidance Notes, promote the use of valuation standards and ensure more rigorous training of valuers with a view to minimising the incidences of unreliability and inconsistency of investment valuation in the country

Client Influence on Valuations in Nigeria

Against the background of reports of client influence on valuations in Nigeria from bank managers (who allege deliberate inflation of mortgage valuation estimates), and from taxation officers (who allege deflation of valuation estimates so as to reduce tax), this paper examined the nature of client influence on the valuer in Nigeria and on his value estimates. The research involved the distribution of 95, 54 and 25 questionnaires backed up with interviews to valuation firms and their clients (property development/property investmentportfolios managers and banks) respectively. Data was measured by means of Likert scales and analysed using weighted average frequency distributions and the kruskal-wallis test on non-parametric data. It was discovered that clients do influence valuations and most of the influence comes from individual clients for mortgage and sale valuations. The influence normally takes the form of 6-15% upward adjustments of valuations for mortgage valuations or 1-5% increases for sale valuations. The influence is most often felt at the report production stage of the valuation process. The study suggests that the increasing spate of client influence must be controlled by means of a carrot and stick strategy (stronger professional disciplinary enforcements combined with rewards for evident cases of resistance to client influence) and through psychological/moral fortifications of valuers at formative stages

Empirical Verification of the Accuracy of Valuation Estimates Emanating from Nigerian Valuers: A Case Study of Lagos Metropolis

reliable and accurate manner. This study sought to examine with a view to validating or dispensing the criticisms as to whether Nigerian valuers are capable of undertaking investment valuations in a reliable and accurate manner or not. To achieve this aim, the paper employed quasi-experimental survey methods. Forty five (45) estate surveying and valuation firms were sampled in Lagos Metropolis, the study area. The study used both descriptive and inferential statistics. The study revealed a wide variance of valuation estimates from the sale prices of the twelve properties sampled which indicated that the valuation estimates are not accurate and reliable. The study concluded that the Nigerian Institution of Estate Surveyors and Valuers and Estate Surveyors and Valuation Registration Board of Nigeria (the two bodies responsible for the regulation of the valuation profession in the country) should take up the responsibility of ensuring that variance in valuation is minimised by way of providing databank in order to provide more meaningful valuation advice

Factors Affecting the Usage of Major Heuristics in Nigeria Property Investment Valuation

Heuristics property research has been confined to Anchoring and Adjustment at the neglect of the other three major ones, which are, availability, representative and positivity. Even when researches in anchoring and adjustment heuristics are conducted they are usually confined to its existence. This study examined factors affecting the usage of heuristics from variables drawn and conceptualized from literature review (models). This is geared towards focusing heuristics property research particularly in this country. This study is a cross- sectional research entailing a survey of 159 out of the 270 Head Offices of Estate Surveying Firms in Lagos Metropolis, the entire 29 and 30 Head Offices of Estate Surveying Firms in Abuja and Port-Harcourt respectively. The primary source of data collection was through the questionnaire in the form of conducting interview. The data collected was measured using ordinal scales and analysed using categorical regression analysis on the SPSS Software. The zero- order correlation was used as a measure of variable importance being independent of the other predictors in the model. It was observed that the most predominant factors affecting the usage of Anchoring and adjustment; Availability; Representative and Positivity Heuristics are complexity of investment method of valuation (-.234; .462) and age of the estate surveying and valuation firm (-.339; -.297) respectively. The study thereby reveals areas of principal focus in heuristics property research so as to avoid superfluity

Perception of Disamenity Hazards on Residential Housing Values in Lagos, Nigeria

Landfill disamenities have been known to poison and threaten the natural environment with various degrees of contaminations and hazards ranging from air contamination to property diminutions. This current study identifies and evaluates the various environmental contaminants and hazards attributable to the four official landfills in Lagos State via perception. A total of 229, 2 341 and 315 structured questionnaires were administered to Estate Surveyors and Valuers, residents living within 1.2km distance from the four landfill sites and Lagos State Waste Management Authority (LAWMA) workers respectively and on the avearge, 78 percent were retrieved. Data analysis showed that residents living within 1.2km distance the landfills identified the most outstanding hazards detrimental to the environment and human health as poisonous odour, truck traffic, stigma, noise pollution and threats of insects, pests and rodents. The study suggested closing down of all four operational landfills sited within residential areas and also a stern discouragement of illegal dumpsites. It recommended establishment of new landfills which should run on latest technology to avert pollution and also be sited in unhabited sites out of town. This as the study envisaged would reduce to barest minimum, landfill hazards and nuisance both to the environment and man

Influence of Valuations on Property Prices in Nigeria

Over the years, researchers in the UK, US, Australia and Nigeria have attempted to ascertain if valuations are good proxies for realized prices by means of statistical tests particularly standard deviations and regression analyses. However, Baum A., Crosby N., Gallimore, P., Gray, A., and McAllister, p., (2000)demonstrate that such comparisons of realized prices and prior valuations stand above the market, which is not the case in the UK market. This work aimed at determining if a casual relationship also does exist between prices and property values in Lagos State. A total of 135, 91, 25 questionnaires were distrbuted to valuation firms, property development/property investment portfolios and commercial banks respectively. data was measured by means of Linkert Scales and analysed using weighted average frequency distributions and the Kruskal-Wallis test on non-parametric data. It was discovered that values produced by valuation firms mimic those of in-house valuers of development companies/property investment portfolios and banks, both in method and figure. The valuations do not however stand above the market but have a casual influence on price. It was advised that in order to prevent crashes such as was experienced in the UK, valuation stakeholders continue to drive the valuer to greated levels of efficienc

Effect of Principal Heuristics on Accuracy of Property Valuation in Nigeria

Valuation inaccuracy has been attributed amongst others to behavioural issues such as the usage of Anchoring and Adjustment Heuristics. There is however a dearth in the research of the other principal heuristics namely availability, representative and positivity. This research is hereby aimed at discovering the effects of these heuristics on the accuracy of property valuation. To accomplish this, the study undertook a cross-sectional questionnaire survey of 159 of the 270 Head Offices of Estate Surveying and Valuation firms in Lagos Metropolis, while 29 and 30 questionnaires were distributed to the Head Offices of the entire Estate Surveying and Valuation Firms in Abuja and Port Harcourt respectively. For ease of coverage, Lagos Metropolis was stratified into six zones; thereafter respondents were selected randomly. The respondents were required to carry out simulated valuations using each of the four types of heuristics and also with supplied current market data. The T-test at the 95 per cent confidence interval was employed to test for inaccuracy in heuristically determined values relative to the sale values (values of the ‘control’ properties). The result reveals that heuristic-determined values, particularly that of representative, are not as accurate as those derived from supplied current market data. The authors recommended more focus on research of representative heuristics while consistent usage of heuristics should be dissuaded, to prevent loss of clients’ confidence in valuation reports