IDEAS home Printed from https://ideas.repec.org/a/eme/jpifpp/jpif-08-2024-0099.html
   My bibliography  Save this article

Behavioural shortcomings to avoid in asset valuation using comparable method – insights from a survey experiment

Author

Listed:
  • Djoko Setijono

Abstract

Purpose - The study aims to identify behavioural shortcomings made by appraisers while conducting valuation (in an experimental setting) of a commercial property in Indonesia. The research attempts to provide insights regarding the valuers’ behaviour, that is logic, judgment and decision particularly during the selection of comparables and the adjustment process. Design/methodology/approach - The research mimics the setting of a real valuation assignment by applying survey experiment. To conduct the survey experiment, the researcher first creates a standardised working paper to be electronically sent to and then filled in by individually/personally approached valuers who have confirmed their willingness to participate in the research. The respondents are valuers from various institutions such as appraisal firm, bank, financial institution and multinational corporation in property research and agency, who have passed Basic Professional Education in Property Valuation (which makes them entitled registered valuers from the Indonesian Ministry of Finance). The respondents were asked to be involved in the experiment as an appraiser valuing a real object by filling in a working paper based on a given valuation case. The researcher (who is also a chartered/licensed valuer) carefully observed what actually has happened in the process of adjustment determined by the appraisers according to their judgments and decisions. The researcher and the respondents are able to interact (when necessary) in order to clarify, to confirm or if there are comments as well as questions from the respondents regarding the research. The interactions enable the researcher to capture richer behavioural insights. Findings - The following behavioural shortcomings are identified from the respondents’ submitted working papers and reactions during their participation in the research: (a) information avoidance, (b) bias and fallacy and (c) inaccuracies. The first two are related to how valuers address and react on a certain issue such as information, while the last is related to their judgement and decision making. It is also found that inaccuracies can appear in the following modes: inconsistency, misplacement, assumed equality (assumption of insignificant difference) and unjustified allocation. Practical implications - The results of this research provide insights of real examples regarding what to avoid when conducting a professional valuation work, that is unnecessary, incorrect perspectives and actions. Originality/value - The selected research method and the applied data-collection technique allow a closer look at how valuers conducting valuation work and/or a deeper observation inside valuation process therefore enables to identify what inappropriate uses during anchoring and adjustments might be. This research contributes to scarce literature on behavioural valuation research based on own/direct experience.

Suggested Citation

  • Djoko Setijono, 2025. "Behavioural shortcomings to avoid in asset valuation using comparable method – insights from a survey experiment," Journal of Property Investment & Finance, Emerald Group Publishing Limited, vol. 43(3), pages 340-356, January.
  • Handle: RePEc:eme:jpifpp:jpif-08-2024-0099
    DOI: 10.1108/JPIF-08-2024-0099
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/JPIF-08-2024-0099/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers

    File URL: https://www.emerald.com/insight/content/doi/10.1108/JPIF-08-2024-0099/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers

    File URL: https://libkey.io/10.1108/JPIF-08-2024-0099?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:jpifpp:jpif-08-2024-0099. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.