CLIENT PRESSURE IN THE RESIDENTIAL APPRAISAL INDUSTRY

Abstract

This study examines the extent to which client pressure is prevalent in the Singapore appraisal industry, emphasizing on appraisers from real estate firms providing residential appraisal services. It seeks to determine whether clients pressure appraisers to modify appraisal values, and the likely impact of client pressure on the industry. A survey queried appraisers' experience with client pressure, the sources of pressure, the types of threats or coercion used by clients, and the awareness of other appraisers complying with clients' demands. The survey findings showed that client pressure is present, with private individuals as the most cited source of pressure. Though clients do not often use threats or coercion to pressure appraisers, there are suspicions that some appraisers have lost some of their independence in their appraisals. A case scenario was also included for respondents to role-play the decision of an appraiser on whether to modify appraisal value upon client's request. The incorporation of two factors relating to client pressure allows a test on the significance of these factors and their interaction effects on respondents' decisions. The results of a logistic regression model indicated that their decisions are not affected by the amount of pressure perceived to be coming from clients and/or the risk of being subject to disciplinary actions by regulatory institutions. Although the statistical results showed that appraisers are unlikely to succumb to client pressure, the survey evidence suggests that the issue of client pressure should be a major concern with regards to the independence of the appraisers.