Ranking the Causative Factors of Mortgage Valuation Inaccuracy in Kaduna Metroplois

Bilkisu Adamu Aliyu,Hamza Usman,Habibu Sani,Hassan Muhammad

doi:10.2478/remav-2018-0026

Bilkisu Adamu Aliyu, Hamza Usman + Show 2 more

Open Access

https://doi.org/10.2478/remav-2018-0026

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Abstract

Abstract This paper is aimed at contributing to the scarce empirical literature on mortgage valuation by ranking the factors that influences mortgage valuation inaccuracy in the Kaduna Residential property market. A quantitative research approach using a survey design was adopted and structured closedended questionnaires were designed and administered to 57 registered Estate Surveying and Valuation (ESV) firms in Kaduna metropolis; 51 out of the 57 administered questionnaires were returned and used for analysis. A simple random sampling technique was employed and the 5-point Likert scale used as the scale of measurement, while causative factors were ranked using the Relative Importance Index (RII). The study analyzed the data using percentages. Findings indicated that data inadequacy, imperfection in the property market and clients’ pressure are the most trending in the absence of a unified valuation approach. The regulatory framework and valuation methodology are least contributory to valuation inaccuracy in the study area. The research will be of interest to practitioners and academic researchers interested in mortgage valuation as a guide for conducting mortgage valuation in the study area.

Highlights

Recent concerns in the sphere of property valuation regard the quality of residential property valuation as a compelling intermediary tool for benchmarking property deals, overwhelmingly witnessing extensive attention and, thereby, provoking open deliberation in the UK, US, Canada and Australia (BROWN, MATYSIAK 2000; OGUNBA 2007)
Even in nations where portfolio management is in its early stage, clients generally rely on valuation opinions to make decisions on mortgage, insurance, and for other purposes
The requirement for precision and corrective action is not limited to advanced nations, as all nations require investigative studies to recommend how their valuation profession can be perfected so that its customers can confidently base their decisions on valuation estimates (OGUNBA2007)

Summary

Introduction

Recent concerns in the sphere of property valuation regard the quality of residential property valuation as a compelling intermediary tool for benchmarking property deals, overwhelmingly witnessing extensive attention and, thereby, provoking open deliberation in the UK, US, Canada and Australia (BROWN, MATYSIAK 2000; OGUNBA 2007). Even in nations where portfolio management is in its early stage, clients generally rely on valuation opinions to make decisions on mortgage, insurance, and for other purposes. Some clients suffer the negative consequences of inaccuracy when their properties are disposed of at values lower than the real market price Such inaccuracy does not portray professionalism, as it affects the perception of clients and the general public on valuers integrity, thereby ascribing guess-work as the basis of valuation assessments employed by valuers. This in turn generates suspicion about the competence and credibility of appraisers. Incursions by other professionals into the realm of property valuation in Nigeria may be connected with the perception that valuations are matters of guesswork

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