Journal of Emerging Trends in Economics and Management Sciences: Home

Article Title:
The Reliability of The Investment Method of Valuation in Valuing Income Producing Properties For Mortgage in Nigeria. A Case Study of Calabar Metropolis
by James B. Effiong

Abstract:
This study examined whether the investment method of valuation is reliable and appropriate in the valuation of income producing properties for mortgage purposes. A mortgage is a loan which is granted on which landed properties are used as collateral or security for the loan. For mortgages to be granted, the banks will require the services of estate surveyors and valuers to assess the value of the properties used as collateral for the loan. The question that always comes to bear is the method that appropriate in carrying such valuation. To achieve the aim of the study, a survey method was employed using questionnaire administered on respondent estate surveyors and valuers in Calabar metropolis. The study surveyed valuers opinions on the on the reliability of the investment method of valuation when valuing for mortgages and data collected through questionnaire was analyzed using descriptive statistics to find the mean score, standard deviation and percentages. The findings from the study indicate that the investment method of valuation is the most reliable and applicable method in valuing income producing properties for mortgage purposes. The possible problems of the investment method were seen to include absence of data on sales, comparable evidence on rent, dearth of data on yield, lack of data bank etc. The study concluded by recommending the creation of a central property database and publication on quarterly, bi-annually or yearly, adopting/enforcement of international valuation standards, re-training of valuers through workshops or MCPD. The investment method of valuation when fully embraced and adopted by valuers rather than the cost or comparison method, will further help to reduce valuation variance and inaccuracy in Nigerian.

Keywords: valuation, investment method, mortgage, reliability, Calabar, Nigeria

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