In the mind of the property appraiser : Studies of commercial property valuation

Abstract: A transparent market provides participants with as much information as possible. In Sweden, where the environment of commercial properties is highly transparent various actors still need to minimise some continuing information asymmetry, and one possibility is to hire property appraisers.Transparent commercial property markets are often regulated by governments and professional institutions. The combination of regulation and socialisation through memberships in professional associations and shared educational backgrounds, training, work experience, and institutional frameworks serve to produce and reproduce professional values and identities. The overall aim of this thesis is to describe and analyse the Swedish profession of property appraisers as expressed through members’ perceptions and use of various standards and methods, ways of gathering information gathering, assessments of value-influencing factors, and their confidence in their own assessments when valuing commercial properties.The repertory grid technique was used to collect and analyse empirical data and to map the thought patterns of respondents in two main samples. The repertory grid interviews in 2010/2011 included about half of the appraisers in Sweden (67 of 138), and in 2015 just over half (81 of 145).This thesis concludes that Swedish authorised property appraisers use country dependent valuation standards and methods, but there are signs of their increased adoption internationally. Swedish appraisers gather and assess information in a similar way. Their aggregated thought patterns demonstrate relatively strong homogeneity and moderate complexity. However, the findings also reveal that appraisers’ thought patterns differ depending on the university from which they graduated. The appraisers graduated from the highest ranked university simplify their valuation judgements more than do other appraisers.During the valuation process, property appraisers gather and assess a large amount of information considered relevant for estimations of a property object’s market value. Four types of information (local environment, location, rental income, and discount rate) seem to have the greatest impact on the estimated market value. The appraisers further perceive that these information types is common in that the decisions in the information gathering stage is critical to the entire valuation process when using clients as information sources. This seems to affect their perceived confidence at the assessment stage and, in turn, the final estimated market value. In situations where the appraisers have low confidence, they are left dependent on the clients, which risks reducing their independence.