Professional Judgments in Valuation Decisions

Introduction

Valuation firms provide essential services to society. By supporting individuals, public organisations, and private businesses in a variety of financial decisions and restoring normalcy and trust in property markets, valuers contribute to the efficient functioning of a country’s economy, society, and environment. However, the valuation process—particularly those involving commercial properties—often involve unpredictable, non-routine and complex situations which require valuers to bring their professional judgement and experience to bear Valuation professionals make judgements when assessing and interpreting property features and market dynamics as well as when they select what is comparable to use, how to report it, and the level of adjustments to make. Sufficient detail is required for the comparable information to be useful, but information overload must be considered.

Valuers make professional and ethical judgments when assessing the accuracy and reliability of information and its impact on the valuation outcome. They need to consider the application of valuation principles, rules, and standards as well as interpret relevant ethical requirements. The use of professional judgment is more intuitive in settings such as interpretation of standards, risk assessment, and the definition of valuation procedures. A critical area of professional judgment in valuation is ascertaining materiality. This concept plays a pivotal role in enhancing the relevance of property valuation reports to clients and other intended users. Establishing whether property- or market-related information is material is a matter of judgement and a range of factors and circumstances, including both quantitative and qualitative factors, as well as the nature of the information reported.

Overall, the application of professional judgment in valuation processes is significant and of utmost importance to many constituents; hence, it must be clarified. This includes enhancing our understanding of the requirements, attitudes, parameters, procedures, and factors that influence professional judgment.

International valuation standards frequently remind us of the concept of professional judgment, although they do not define it clearly. Despite such guidance, there are a wide variety of concepts and approaches (e.g. intuitive vs. structured professional judgement). Judgment-related studies have been published, especially in the context of valuation; however, the subject of professional judgment is still somewhat of a black box, and further research is needed.

List of topic areas

1. The impact of culture on application of professional judgement
2. The influence of regulation on professional judgement
3. Personal attitudes and types of professional judgment
4. The perception of risk and professional judgement
5. How professional judge materiality in their decision-making processes

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Key deadlines

Opening date for manuscripts submissions: 1st April, 2024

Closing date for manuscripts submission: 1st September, 2024

Email for submissions: [email protected]