Property Valuers

From: Robert Forward

After a recent read in the Australian Property Journal (a subscription bases magazine) I've read an article regarding Property Valuers.

Professional Indemnity insurance for property valuers has risen by 273% in the past two years, with the excess to be paid on policies went from $6500 up to $9800.

Seemly the valuing of commercial property is the most riskiest accounting for 20% of claims. In another article one commercial valuer was sued for $30m for over valuing the Brisbane Myer Centre and he just lost a case on appeal. The valuer has to pay $12m in costs and $18m in interest. That is what I call OUCH...

Anyway, I thought that would be worth knowing since some us are having troubles getting valuers to do a true valuation on properties. It looks like they are covering their own butts from litigation to me.

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Reply: 1
From: Mike .

Hi Robert,

Thanks for that info. If you're correct in suggesting that valuers are running scared of litigation then, at the risk of overdramatizing the situation, it smacks of professional cowardice.

As a comparison, do doctors and surgeons stop saving lives because they are afraid of making a mistake which may have serious consequences?

I know that some forum members sympathise with the valuers saying that it is an imprecise science because most properties are different and the market is continually shifting, but from some examples that have appeared on the forum lately, you'd have to question whether they are applying their methodology correctly.

Sorry for the downbeat tone of this post.

Regards, Mike
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Reply: 1.1
From: Rolf Latham

Hi guys

Over 80 % of my clients vals come in fine.

Where they come in short it usually has nothing to do with being conservative I feel. We have found it is usually comes down to the work having been done in a hurry.

In about one third of cases of vals coming in short it is becasue we (the broker and the client) have got it wrong.

Also to be fair, the small money paid for a val by most lenders can lead to shortcuts.

I would say they do mostly a very good job.


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Reply: 1.2
From: Sim' Hampel

Mike wrote:

"As a comparison, do doctors and surgeons stop saving lives because they are afraid of making a mistake which may have serious consequences?"

There has been much media coverage in recent times of health care professionals refusing to perform certain procedures purely because of the insurance risk.

This is particularly so in rural areas where General Practitioners refuse to handle births due to the litigation risks and the extraordinary high insurance premiums that go with it, which unlike their specialist city counterparts, they are unable to effectively on-charge to their patients.

It's all well and good claiming that they took an oath or something like that and they should be forced to do these things no matter what the cost. But at the end of the day, these people are not running charities - they are trying to make a living.

As litigation forces insurance costs higher and higher it forces doctors into marginal financial positions which makes it difficult to justify the costs.

Just because valuers do not necessarily have lives on the line makes them no less or more "professionally cowardly" than GPs and such. Just like you would look at the numbers on an IP deal and only invest if they stacked up, these people will look at the numbers (risks versus rewards) in their deals they are asked to value, and if the numbers do not look good, they will walk away.

Which of course is why I work in the information technology industry, which has so thoroughly hoodwinked the business community that we (in general) can get away with incredibly shoddy work and still charge lawyer-like rates for our time with little in the way of repercussions. *sigh*.


Sim's random kinda-meaningful cliche-quote:
~ Mudhole? Slimy? My home this is. ~
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