answer for the each of the following problems:
1. Is it ethical to lodge a complaint against another valuer's:
advertising and promotion?
Under what circumstances? To whom should a complaint be made and in what form?
2. A client puts to you a valuation carried out for them by another valuer. They ask you to comment on the
valuer's methodology and result. How should you proceed if you find the following:
you discover that the valuer has made, in your view, an error of judgment in that he has not applied a check
method which gives a much greater value than the one he has reported. What do you tell your client?
you discover that the valuer has made an arithmetic error in his calculations. How do you handle the situation?
Inform your client? Inform the valuer involved? Say nothing, as to do anything would put the whole profession in
you believe that the valuation is "about right", but cannot determine how it was determined, as no workings
were included in the report. you know that if you cast sufficient doubt on the valuation, your client will commission
a second one from you, at a very good fee.
3. A potential client asks you to provide a quotation for a valuation assignment. This in due course is provided
in considerable detail. Subsequently, you learn that your quote was photocopied and passed on to XYZ Valuers, who
provided a slightly cheaper quote and won the job. What action, if any, can you take?
Is XYZ valuers acting ethically?
If you were their chief valuer, and the client offered you the competitor's quote, how would you respond?
What if the client comes back to you and says, "XYZ valuers have quoted $5,000 for this valuation.
If you can beat their quote, you've got the job..."
What if XYZ's chief valuer calls you and says, "our two firms are the only ones quoting on this job.
Why don't we put our heads together and agree on the general level of fees, and then the winner will be the
cheapest within our criteria?"
4. You are aware of a new leasing of some city office space, and you contact the leasing agent for details.
She tells you the agreed rent, and other details quite readily. This is really most useful information for your purposes,
but has she breached a fiduciary relationship between herself and her client in disclosing the details?
The information is crucial to your case in a rent review negotiation in which you are acting for the lessee. the agent
requests that you do not disclose the information in your negotiations. how do you proceed?
The agent reveals the details of a secret agreement between the lessor and lessee involving lease incentives.
Has she breached her fiduciary duties, or is it ethical in the broader context to disclose the details of such
agreements, which only serve to distort the true market picture?
If you use the information in your valuation, how should you present it?
The agent says, "I'll tell you about the deal, but only if you give me any other comparables you come across in
your research and tell me what your valuation comes in at when you're finished." You really want the information she
has. What do you do?
5. Discuss whether or not you think the following situations are ethical for valuers:
advertising on the radio
taking out a quarter-page ad in a city newspaper to promote your services.
claims about the practice in newspaper advertisements:
"we are the most highly regarded valuers in ....."
"phone XXXXX for a competitive quotation..
"all our valuers are tertiary qualified and cpd certified. demand the best!"
"our firm is covered by professional indemnity insurance to the value of $10 million"
"valuations from $100"
"phone now for a free introductory appraisal"
"cold-calling" all the bank managers in a particular area, arranging promotional appointments, and talking to
them about the benefits of using your firm.
producing ball-point pens with "abc valuations: XXXXX" printed on them, for mailing to potential clients.
doorknocking all the tenants in the main street, telling them about your "rental negotiation service", whereby
you offer to negotiate their next rent review for them, at a fee of 10% of the reduction achieved by you.
6. Bill is a valuer with GH Valuers. IJ Valuers offer him a job, which he eventually accepts. On joining IJ,
he rings all his old employer's clients advising them of his new position and offering his services to them through
his new employer. Is this ethical behaviour?
For many years, Bill had undertaken a particular annual valuation for a GH Valuers client, at an agreed set fee,
known to Bill. On joining IJ Valuers he rings this client and offers to do the job for them next time at a cheaper
fee than that charged by his former employer. Should he do this?
7. Valuers X and Y are appointed by a lessor and lessee to settle a rent review dispute. They meet and following
an examination and discussion of the evidence agree to recommend to their respective clients a settlement of the rent
at $100,000 per annum. A few days later, and prior to communication with the client, Valuer X discovers hitherto unknown
and very important evidence which Valuer X firmly believes alters the rental conclusion agreed to.
What should Valuer X do:
if the new evidence and rental conclusion is detrimental to her client and beneficial to the client of valuer Y?
if the new evidence and rental conclusion is beneficial to her client and detrimental to the client of valuer Y?
8. John has for some years undertaken valuation work for ABC Insurance Company Limited, but has not received an
instruction from that firm for approximately 12 months and has heard on the grapevine that another valuation firm has
been doing work for ABC Insurance. John receives an instruction from a lessee in a building owned by ABC Insurance
to undertake a rent review and proceed to a rental arbitration if that course of action proves necessary.
Two years earlier John had undertaken the same rent review exercise on behalf of ABC Insurance, but has not
been instructed to on this occasion.
What action should John take?
9. Robert works as a salesman with the local office of World Conglomerate Inc, a large commercial property agency.
Giant Burgers Ltd, one of his employer's regular portfolio clients, sends through a request for World Conglomerate to
identify and purchase on their behalf a number of sites on which they may develop fast food outlets. A particular site
is known to Robert, and he expresses an opinion that the owner may be willing to sell.
It is agreed that an approach be made by Robert to the directors of Soapy Pty Ltd, the owner of the site. Soon afterwards
he forwards a non-negotiable asking price to Giant Burgers. The price is high, but Giant Burgers really needs a site in
that location, so the price is accepted. Subsequently, it is discovered by Giant Burgers Ltd's solicitor that Robert owns
20% of Soapy Pty Ltd.
What are the ramifications of these events, and the likely outcome? If a breach of ethical behaviour has occurred,
how else should the transaction have been handled?
Would any of the following mutually exclusive scenarios alter your opinion:
Robert's shareholding in Soapy Pty Ltd is valued at $5,000.
Robert only owns 2% of Soapy Pty Ltd
the site is owned by Robert's son-in-law
the site is owned by BHP, and Robert has a few shares, valued at $2,000.
10. Harry is a property manager. One of the properties he manages is a transport depot on a 5 hectare site at Tabletop. At the far end of the site, dangerous chemicals have been stored in large drums for some years.
Eventually, they are removed and it is discovered that an unknown amount of the chemical has been leaching into the soil.
Harry calls his client, who instructs him to arrange for a contractor to bulldoze some fresh topsoil over the area of the
spill, to cover it up. "It will cost us a fortune to clean up otherwise, and after all the site's in the middle of nowhere", the client tells Harry.
Contrast Harry's duty to his client with his duty to society as a whole. What should he do?
11. You are the sales director of a property agency. You are now looking to take on an additional commission
salesperson. There are two applicants. One is well known, talented, and with a record of high sales achievement, but
known to regularly "bend the truth" in order to achieve a sale. The other is competent, but his sales record is not as
illustrious. He is, however, known to be scrupulously honest. Which applicant would you choose?
12. A valuer who has in the past principally been involved in the valuation of shopping centres and industrial
premises is requested by a client to undertake a valuation of a large international style hotel property which has come
into their portfolio through a company acquisition. The valuer has no experience in such properties.
Discuss whether or not they should accept the appointment, and if so how should they proceed.
1. What is meant by the term "professional" and how does it apply to a number of real estate participants?
2. What role does a professional institute play? Is a professional institute necessary for valuers?
3. How do courts view "expert" witnesses? How are "experts" different from other witnesses?
4. Are legislative controls necessary for valuers? Discuss.
5. "Valuers have obtained both a professional and legal monopoly. This is contrary to free market forces."
Do you agree with the above quotation? Discuss.
6. Construct your own code of ethics for valuers.
7. A professional code of ethics does not have legal weight. Discuss problems that can arise between a
professional code of ethics, the public's interest, the common law's duty of care and consumer legislation such
as the Fair Trading Act.
8. What are the advantages and disadvantages in a valuer charging "contingency" fees?
9. "Valuation research tends to be discipline centric whereas general systems theory identifies the more
important players in the valuation system".
What is meant by "discipline centric" and how would it apply to valuation research? Who do you think are the most
important players in the valuation system?