How valuers use the value opinions of others

Abstract

Theory suggest that valuers will rely on previous values estimates in the face of greater market uncertainty. Nevertheless recent research has provided evidence that experienced real estate valuers (appraisers) working in geographic areas familiar to them may not be influenced by the previous value judgement of other, anonymous experts. Presents a study which extends the previous investigation by examining appraisers valuing property in geographic areas unfamiliar to them, appraisers who therefore face significant market uncertainty. In controlled experiments valuers were asked to appraise a subject property in an area unfamiliar to them and were offered the previous value judgement of an anonymous expert as a potential anchor (reference point). A control group of experts unfamiliar with the subject market was given no reference point whatsoever. Evaluation of the experimental data revealed evidence that unlike subjects operating in areas of familiarity, subjects unfamiliar with the subject area were influenced by the provided reference point.