Intangible Elements of Uncertainty in Property Valuation: Theoretical Underpinning

Abstract

There has been a considerable and significant number of researches that looked into the uncertainty and risk of valuation process in various parts of the world, especially in the US and the UK. Early research tended to focus on the tangible methods used by valuers. In recent times, research has concentrated on anticipated risk that could be encountered in carrying out valuations and the way that valuation information is processed. The summary of the previous researches skip over a further latent and potential influence: that of the influence of intangible elements of uncertainty and risk on property valuation and the transaction which might follow The aim of this paper is to examine the effect of intangible elements of uncertainty in property valuation and also to have a thorough understanding of the risk inherent in property valuations. The main research questions that this study seeks to address include: What precisely are intangible elements of uncertainty with regard to valuations? How could intangible elements of uncertainty in property valuation be minimized and dealt with? To what extent do intangible elements of uncertainty affect and influence property valuation? And should there be a general approach of anticipating and forecasting intangible elements of uncertainty in property valuation? A mixture of self-administered questionnaires and in-depth personal interviews were considered most appropriate as data collection instrument for this research due to the advantages derivable from both approaches. Descriptive and inferential statistics will be employed to interpret and explain the associations found among the variables. This is a paper in progress and as such the expected outcomes of the study might suggest that the series of comparable evidence available is the most common factor that will affect a valuation certainty. Risk and uncertainty could be inherent parts of the valuation process as regularly the valuer is unable to identify and price correctly all existing and future influences on the value of the asset. It is recommended that the Royal Institution of Chartered Surveyors (RICS) should build up a standard methodology and approach to uncertainty expression, not only for the valuer’s peace of mind, but in order to offer the most excellent and promising service to the general community.

Keywords: Intangible Elements, Property, Risk, Uncertainty and Valuation