Expertise Development in Commercial Property Valuation Practice

Ever since the issue of inaccuracy and variance in commercial property valuation was first documented in the mid-80s by Brown (1985) and Hager and Lord (1985), many researchers have investigated the complex factors involved in effective problem solving in the valuation domain, focusing on the valuer and the valuation process. Several behavioural issues, including heuristics, have been noted to affect valuation outcomes. There is a growing literature on understanding the concept of expertise, especially using the field of cognitive psychology, and the present research explores valuer’s cognitions in a commercial valuation context. The study aimed to determine how the role of valuers’ cognitions and cognitive structures are crucial in furthering our understanding of effective valuation problem solving, as well as improving valuer training efforts. The research was undertaken from a ‘Critical Realist’ perspective, and used a knowledge elicitation method called ‘Cognitive Task Analysis’. Data were collected through a ‘Verbal Protocol Analysis’ (VPA) of a simulated commercial valuation exercise based on a real building, using semi-structured interviews. Six subjects (comprising two expert valuers, two intermediate valuers and two novice valuers) participated in the simulated valuation and in the follow-up interviews. Two further experts were interviewed to validate the findings. Content and event-sequence analysis were performed on the data collected from the simulated valuation to yield the knowledge states, problem-solving techniques (‘operators’) and strategies used by valuers. Mapping of thought processes revealed that expert and intermediate valuers had better and well-structured patterns of thought which demonstrate greater degrees of cohesiveness and interrelatedness between problem-solving operators. Centred on data interpretation and meta-reasoning activities, expert and intermediate valuers used the problem-solving operators initially to schedule valuation analysis or establish valuation strategies, and to re-interpret and diagnose previously acquired information to update the outcome of their past valuations. Novice valuers’ structured processes of solving the valuation problem show fewer linkages between problem-solving operators, which may suggest underdeveloped cognitive structure or quick disengagement from task. The results also show that where available data is inadequate, valuers solve an overall valuation problem by dividing the problem into a number of sub-problems that are solved by engaging in two main types of thinking: analytical and creative. These two levels of thinking enable the valuer to integrate available data with his/her existing knowledge through forward and retrospective (‘backwards’) reasoning. However, there were effects associated with level of expertise in the way these cognitive processes are used, with the expert and intermediate valuers being more fluid, thorough and comprehensive than the novice valuers. This enabled the expert and intermediate valuers to develop a greater number of more-sophisticated solutions to challenging valuation problems, and these were more likely to be immediately followed by meta-reasoning related activities or further exploration of data to justify the solutions generated. Novice valuers could not generate such well-developed solutions indicating that they were much more superficial in their valuation problem solving. These processes are discussed and synthesised into a descriptive model of expert-valuer cognitive structure for undertaking valuation of a commercial property, in order to show an understanding of how valuers integrate the various cognitive processes to determine the value of a property based on available information. The research concludes with an assessment of the implications for valuation training and education.