Valuators for hire - Value of assets determined by who is paying

Tyrone Reid, Sunday Gleaner Reporter

Insurance companies, mortgage houses, and individual buyers are reportedly being ripped off by persons who are paying valuators to either lower or pump up the price of assets.

At least one valuator believes the sector, which, he says, lacks oversight, is out of control. As a defence mechanism, most financial institutions and insurance companies only accept valuation reports prepared by entities on its pre-approved list.

Still, David Thwaites, a chartered valuation surveyor and real-estate adviser, said the practice is quite pervasive. "Valuations can be bought. It is certainly something that is being done," he told The Sunday Gleaner recently.

Thwaites revealed that he was confronted by the problem not long ago when a prospective client, who, he said, is from the upper echelons of society, asked him to deliberately lower the market value on a property he was seeking to purchase from the Government.

"His view was that he was paying me, so I should lower it. These things happen," he said.

"It can affect people's decisions (and it) puts clients and institutions at some risk ... . Currently, there are no checks and balances," added Thwaites.

Another valuation surveyor, Lloyd Davis, a partner at Allison Pitter and Company, confirmed that there are valuators for hire in the local sector who estimate market value for cars, houses, and other assets.

"The fact of the matter is that it does happen. I have no doubt," Davis said.

However, he was more conservative in his view of the pervasiveness of the underhanded practice. "I don't know for a fact that it is widespread. Clients know who to approach," he said.

Both Davis and Thwaites, who were interviewed separately, indicated that the practice was widespread during Jamaica's financial sector meltdown in the 1990s.

cases not investigated

Said Davis: "In the '90s, it was happening; it was part and parcel of the meltdown. The trouble is we don't investigate these things and ventilate them."

Thwaites urged his colleagues to maintain their integrity and resist the lure of filthy lucre in the face of pressure to "low ball or pump up the value" of an asset.

He reminded his fellow valuation surveyors that multimillion-dollar deals are made on the strength of these bought valuations.

To remedy the problem, he advised, valuators must be made to adhere to global standards of market value and an internationally accepted definition of the market.

"We need an appraisal and valuation standards committee attached to the real-estate board that would regulate and prescribe minimum requirements," Davis said, while noting that persons or institutions with matters of contention over valuation estimates could appeal to the proposed committee.

Davis disagreed with his colleague and recommended a less bureaucratic solution. "I'm not into the committee business. One way of dealing with it is by bringing the valuators together."

Davis believes the problem can be better resolved if each party gets his own valuation done, and if a discrepancy arises, then both valuators would be brought to the table to iron out the matter.