A wake up call for Valuers

Posted on Tuesday, March 4 2014

The Valuation Industry is in the process of getting a bit of a wake-up call. Property IQ , in conjunction with one or more of the banks, are proposing a ‘clearing house’ type system whereby Valuers instructions are received from the bank via a third party (who allocates the Valuations), rather than the property owner directly instructing the Valuer. This system is more along the lines of how Australia operates. Whether or not the system itself will be successful is yet to be seen so I won’t speculate on that. I will suggest however that it has already created improvement to the profession.
It appears to have evolved, at least in part, from the banks’ dissatisfaction of residential valuation standards in New Zealand. One bank estimates that around 40% of valuations do not meet industry standards. I would disagree with that – it’s probably higher from what I have seen. After an initial flurry of hot air from the NZIV’s (New Zealand Institute of Valuers) lawyers in response to the ‘clearing house proposal’, it was recognised that the industry itself needs to be proactive in maintaining standards in the profession. The institute is proposing a system for firms to be accredited and audited to ensure high standards. This makes sense as I feel a lack of auditing has contributed to the questionable standards of some Valuers. It is clear that the majority of the institutes’ members are hoping this proposal will negate the need for a ‘clearing house’ system but it may well be too late?
The downside of auditing/accreditation is that Valuers already completing work with diligence and integrity will be faced with more compliance issues, as a result of others shortcomings. But let’s face it -that happens in just about every area of our lives. Some investors may not like Valuations becoming more realistic but it needs to happen. We hear a lot about sustainability these days but usually in relation to the environment. As the world has been reminded since the GFC, it certainly applies to wealth and Valuers worldwide contributed to an unsustainable bubble of finance (with plenty of encouragement given by the lenders!) It’s not about being conservative, just fair and realistic (I’m sure some traders would argue that only being 10% above fair value is conservative!!)
As with most industries it’s a case of evolve or dissolve. Expect the former from the Valuation Industry!

Rene McLean.

 

 

 

 

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Rene McLean - Auckland Franchiser. Property InDepth is New Zealand\'s only fully franchised property valuation and property consultancy service. The only valuation service that can provide comprehensive reports to you, within hours of completing the inspection. So relax and enjoy the experience, that's what we are about.

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