The expert valuer has been described by the courts as one who:
USES SALE EVIDENCE
The method adopted by Mr W is a method which he is quite entitled to adopt, and that is this; he has formed his own opinion of the improved value, apart from and without reference to any sales, and having ascertained from an inspection what was the value of the improvements, he had deducted the one from the other and arrived at an opinion of the unimproved value. Every expert is entitled if he sees fit in ascertaining the market value - and that is what I have to ascertain here - to rest on his own opinion apart entirely from any market transactions, but if he does that he is liable to be met by 3 things;
the opinions of other people;
values based on sales; and
any previous opinion that he himself might have expressed with regard to value.
Pike J, Reading v VG (1923) 6 LGR 132.
USES REASONABLE SKILL AND CARE: .. valuers and architects owe their clients a duty to exercise reasonable care and skill in rendering the services for which they are engaged. If they commit a breach of this duty which causes their client damage, then they are liable to compensate him for the loss which their negligence has caused him - Lord Salmon, Sutcliffe v Thackrah [1974] 1 All ER 859, 881.
The common law duty of care is a strong legal constraint in valuation practice and a breach of this duty leaves the valuer open to a claim of liability for damages suffered not only by the client but also any third party who may have suffered as a result - Hedley Byrne v Heller [1964] AC 465.
The result of this professional liability and duty has led valuers to adopt a number of exclusion or disclaimer clauses in their reports. However, an overuse of such clauses will reduce the valuer's professionalism.
VALUATIONS
Valuers carry out "valuations" that is, they determine the value of the subject property as at a certain date. A valuation is a report which states the value of the land according to accepted practice and theory. It is important to realise that a valuation is much more than the determination of numbers when determining the market value of the subject property. In fact, as is shown below, outside environments such as the consumer (client or taxpayer), the courts and politicians are much more important in the valuation system than the valuer.
It is a common mistake for valuation commentators to think of the valuer as a "stand alone" person who can determine the value independently of the outside environment, a discipline centric view. Rather, the outside environment which is usually beyond the control of the valuer, determines the nature, the content and method of valuation. Therefore, a good definition of a valuation is the one that follows as it recognises the outside environment:
Making an appraisal is solving a problem. The solution requires interpretation, in terms of money, of the influences of economic, sociological, and political forces on a specified real property - American Institute of Real Estate Appraisers (AIREA), "What to look for in an appraisal", 1975.
The more traditional and less accurate definition is as follows:
The act of estimating the value or worth of anything is the duty of the valuator - Wellan, "Real estate valuation", The Valuer, October, 1951, 387.
The following Institute definition although not recognising the effect of the outside environment, at least recognises the eclectic nature of valuation:
Valuation is a method of investigation characterised by insistence on careful appraisal and measurement. It purports to establish a money value for land and buildings both urban and rural. There, as a discipline, it is closely related to economics, to accounting, to surveying, to town and regional planning, and to real estate practice - Australian Institute of Valuers (AIV) Handbook.
To
better understand the effect of the outside environment, valuation
should be analyzed using the systems approach as this puts the
valuation into it's proper context.