Investors and valuers: Similarities and differences from a behavioural perspective

Abstract: This thesis is an explorative analysis of the commercial real estate actors. The behavioral theory has revealed many flaws in the neo classical assumptions. This includes models of rationality and prescribed behaviors. Research suggests both appraisers and investor act in ways that can be seen as irrational. Appraisers amongst other things anchor to figures that are not part of the valuation theory and investor invest on bases that are not fundamentally sound. Both also exhibit biases, such as confirmation bias and loss aversion. If valuation does not reflect the way market participants behave then they fail to give us a correct market value. We use interviews to try and understand how appraisers try to reflect the market and to understand how investors and other market actors value properties by comparing their use of the DCF-method. Our results suggest that there are many technical differences between how methods are used by different actors and that appraisers have a too close connection with the market actors.