An unconsidered orientation towards the market values calculated by appraisers can therefore lead to mistaken decisions. For example, if an investor bases its decisions to sell on appraiser-determined market values that are too low for the applicable time, the investor may believe that it has reaped satisfying profits (on paper). However, that investor is actually selling properties below their real economic value and actively reducing their value. For a more thorough discussion of the issues associated with these accountant-created realities caused by behavioural economics, read Thomas Walter master’s thesis from 2013 (download at www.curem.ch).
Anyone wishing to purchase must be willing to pay a price that all other stakeholders – including appraisers – see as too high. That is why successful real estate investors have learned to make their decision-making only to a limited extent dependent on expert-determined ‘market values’. To do this, however, internal valuation expertise is essential.