Factors Contributing to Valuation Inaccuracies and Variances in Kenya’s Real Estate Sector
Abstract
Real estate valuation inaccuracies and variances pose a significant challenge globally, particularly in regions characterized by inadequate and unreliable market data. This study investigates the key factors contributing to valuation discrepancies in Kenya, identifying valuers’ misconduct, client influence, inappropriate application of heuristics, valuation task complexity, and the unavailability of trustworthy data as primary contributors. A survey research design was adopted, utilizing structured interviews and self-administered questionnaires distributed via Google Forms to collect data. Quantitative data was analyzed using IBM SPSS Version 26, with findings presented through frequency distribution tables, percentages, means, and standard deviations. Qualitative data was thematically analyzed and presented in narrative and verbatim form. The study’s respondents included practising valuers in Kenya, financial institutions, the Valuers Registration Board, and the Institution of Surveyors of Kenya. Findings indicate that inadequate and unreliable real estate data remains the most significant factor driving valuation inaccuracies and variances in Kenya, aligning with previous studies conducted in Kenya and other Sub-Saharan African countries. Additionally, client influence and valuers’ misconduct were found to have a comparable impact on valuation discrepancies, as statistical analysis showed no significant difference between these factors. The study further highlights that while the margin of error concept is widely acknowledged among valuation practitioners, there is no consensus on an acceptable percentage threshold between valuers and the regulatory authority. To enhance valuation accuracy, the study recommends stronger collaboration between the Institution of Surveyors of Kenya and the Valuers Registration Board in regulating valuation practices. Furthermore, it advocates for stronger partnerships between universities and industry professionals to ensure that valuation training aligns with industry needs, equipping practitioners with the necessary expertise to improve accuracy levels in real estate valuation.
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