Client influence on valuation: perceptual analysis of the driving factors.

Also for effective coverage, the sample of the 88 estate surveying and valuation firms were further stratified using the age of establishment as indicated in Table 2.

Table 2 shows that all the age groups are represented by the estate surveying and valuation firms. The sample of the firms is well spread representing 17%, 21.6%, 23.9%, 4.5% and 33.0% of the age groups ranging between 1--5, 6--10, 11--15, 16--20, and Above 20 years respectively. This clearly established the inclusion of both new and old generation firms of estate surveying and valuation. The respondents are therefore believed to be conversant with up to date developments in the field of property valuation. Consequently, the data should reflect the status of valuation practice in the study area.

In addition to the foregoing, the characteristics of the respondents' estate surveyors and valuers were equally examined with a view to establishing their suitability for the study. Table 3 presents the descriptive statistics to that effect.

A majority of the respondents had a Bachelor Degree (55.7%) while 36.4% had Higher National Diploma in Estate Management. With these results, a significance large majority (92.1%) of the respondents possess top--level educational qualification in the theory and practices of property valuation. This, therefore, makes the data more revealing and dependable as far as the subject matter of this study is concerned.

Moreover, all the respondents' estate surveyors and valuers are members of the Nigerian Institution of Estate Surveyors and Valuers (NIESV 2003) with different membership designations, 98.8% for Associates and 1.2% for Fellows. Table 3 also shows that about 53.4% of the respondents have 1-5 years post qualification valuation experience while 30.7%, 11.4%, 2.3% and 2.3% have 6--10, 11--15, 16--20 and Above 20 years post qualification valuation experience. With this background, the next section examines the view of estate surveyors and valuers on the clients' influencing factors.

3.2. Clients' influencing factors Estate surveyors and valuers in the study area were asked to identify the perceived significant and insignificant of the factors to client influence and, consequently, upon the extent of possible influence a client could exert on valuers and the valuation process. Table 4 indicates the responses.

It is evidenced from the table that more than 50% estate surveyors and valuers agreed with all the factors, except valuer's style of decision making (48.8%), as potentially impacting on client influence. These findings are entirely a validation of earlier researches conducted in both auditing and valuation industries, which appeared to be similar, structure wise. For instance, it has been suggested in the auditing literature (see Poneman, 1992 for example) that ethical culture may exists in a company and that would be influenced by employees in positions to promote staff who tend to favour individuals possessing "ethical reasoning" that is closed to their own capacity. Consequently, and, in the valuation parlance, the scenario tend to suggests that different estate surveying and valuation firms as well as individual estate surveyors and valuers may possess differing levels of integrity and ethical behaviour that could enable the firm or the valuer to either resist client possible influence or cave in. Subjecting this variable to the perceptual view of estate surveyors and valuers, an overwhelming number of respondents (95.4%) agreed that some estate surveyors and valuers actually do compromise their integrity and commitment as objective estimators of value.

In examining the issue of the earnings of valuers or valuation firms from clients, the perception of estate surveyors and valuers appeared to correspond to that of appraisers in the US as reported in the study of Smolen and Hambleton (1997). With mean response of 3.511, majority (65.9%) of estate surveyors and valuers supports the view that a firm earning a large percentage of its revenue from a single client may be tempted to "please" that client when a request for unrealistic valuation figure is made by the client. This tendency may, however, be greater in Nigeria because of the competitive nature of the industry vis a viz the quest by practitioners to retain their clients and thus sustain their business.

Also, in a situation where an estate surveyor and valuer or the firm undertakes more than one task for a client, the perception of the responding estate surveyors and valuers, with 60.2% in agreement, is that such a professional or the firm is more likely to be unable to resist possible threats from such a client to produce unrealistic valuation. This view has been established in the auditing industry as well. The study of Lindsay (1989), for instance, identified the situation where an audit firm provides management consultancy to its client as one in which the auditor is more likely to acquiesce with the client.

Similarly, it has also been confirmed in the auditing literature (see Church and Schneider's, 1993) that the involvement of independent auditors in the design of an audit programme affects their subsequent audit work related to that audit area. This scenario, according to Levy and Schuck (1999), may be well applied to the valuation industry in cases where a valuer may have previously recommended a client purchase a property for a particular price and subsequently becoming committed to the recommendation to please their client. About 53.4% of the responding estate surveyors and valuers agreed with this view, thus confirming the case of possible biasness towards a particular client even when an express request has not been made.

With respect to the size of the valuation firm, 61.4% of respondents' estate surveyors and valuers support the view that estate surveyors and valuers are more likely to resist possible client influence if they are engaged by big and well established firms. This factor, Smolen and Hambleton (1997) have noted, could even make valuers more vulnerable to client influence where the valuation industry is characterised by many small firms. And, as evidenced from the year of establishment of sampled firms (more than half, 55.6%, established between 1-10 years) the situation could even be worse in our local context. More so that the average monthly salary paid by estate surveying and valuation firms to registered estate surveyors and valuers is below N50, 000 (US$400).

In addition to the foregoing characteristics of individual valuer and valuation practice, certain client characteristics identified to have effects on client influence were also measured from the view point of estate surveyors and valuers. For instance, about 55.7% of estate surveyors and valuers sampled agreed to the statement "certain categories of client are more likely to apply pressure to influence valuers to report unrealistic valuation". Still on this factor, Amidu (2006) and Amidu and Aluko (2007) found that private individuals such as borrowers were the primary source of client influence in Nigeria followed by lending institutions. This, however, contradicts the position in the US where Smolen and Hambleton (1997) identified mortgage bankers as being the primary sources of client influence followed by commercial banks. Kinnard et al., (1997) also found that valuers experienced significant pressure from certain types of client especially mortgage brokers and bankers.

Responding estate surveyors and valuers also agreed (61.3%) to the view that big clients are more likely to influence valuation than small clients. This complements the study of Kinnard et al., (1997) where a direct relationship between client size and the likelihood of valuers revising their reported values in the UK was found to exist. Such relationship could not, however, be established in the studies of Amidu and Aluko (2007) of the Nigerian estate surveyors and valuers and Worzala et al., (1998) of US appraisers.

On the importance of a valuation to client, real estate literature seem to suggest that the more urgently a required valuation outcome is needed by a client, the more likely the client will exert influence on the valuer to come up with a particular reported value. This, according to Rutledge (1994) and Kinnard et al., (1997), may manifest itself in situations for example, where an investment manger's compensation is directly related to valuation outcome. Other situations where the outcome of a valuation is important for a client, and which the responding estate surveyors and valuers were asked to express their view on is where a deal or lean is dependent on a particular valuation figure. About 69.4% of respondents agreed that lenders in such a situation are more likely to influence estate surveyors and valuers to report a valuation figure that would justify the loan amount required.

The foregoing, therefore, confirmed all the factors as significant client influencing factors that could affect the extent of influence a client is able to put on estate surveyors and valuers' reported value in property valuation. However, in order to develop the comparative importance of the variables, the mean rating point (as contained also in table 4) was estimated for each of the variables. The technique demonstrates that from the perception of estate surveyors and valuers in the study area, the three most significant clients' influencing factors with the highest mean rating point are integrity of valuer or valuation firm (4.568), importance of the valuation outcome to the client (3.750) and client size (3.580). This rating was not unexpected as they appear to be a reflection of the major challenges facing the practice of estate surveying and valuation profession in Nigeria. For instance, the study of Amidu (2006) has provided documented evidence in support of the allegations that client influence exist in Nigerian valuation industry, just as it has been established in the US (Kinnard et al., 1997; Smolen and Hambleton, 1997), UK (Baum et al., 2000) and New Zealand (Levy and Schuck, 1999). Given this, it can be logically concluded that most practicing estate surveyors and valuers are not complying with established code of conduct regulating their profession and, consequently, not maintaining high level of integrity and commitment required of practitioners. Although, the Nigerian Institution of Estate Surveyors and Valuers (NIESV 2003) through its Professional Practice Committee, has the power to take appropriate disciplinary action against erring members, majority of practitioners are still not truly committed to the course of the profession, through compliance with the institution 1985 Guidance Notes on Property Valuation. This was confirmed by the President (Otunba Tade Ismail) of the Institution from 1997--1998 in his welfare message:

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