The Economic Role and Emergence of Professional Valuers in Real Estate Markets

Stephan Bartke and Reimund Schwarze

Land, 2021, vol. 10, issue 7, 1-20

Abstract: Land is a scarce resource. It is usually traded as real estate, an economic good with a market value. Often, this market value is not negotiated simply between the seller and the potential buyer, but is based on an assessment performed by a professional valuer, known as a surveyor or appraiser. This article questions the economic role and the emergence of valuers in real estate markets. An institutionally embedded framework for valuation intermediation is developed that elucidates a multi-tiered imperfect information cascade. First, valuers are understood as middlemen, counteracting information uncertainties regarding product quality, namely real estate herein. An additional constraint is constituted by information asymmetries between the valuer and the contractor. The contribution presents a conceptual integration of theories of price formation (and regulation) and theories of intermediation. Investigating new institutional economics concepts considering the emergence of professional associations and the specific formal and informal regulation of nature-related transactions, the contribution then discusses how the valuation professional with regularizations evolves as a superior institutional response to this cascade of information imperfections.

Keywords: transaction costs; asymmetric information; real estate services; land value (search for similar items in EconPapers)
JEL-codes: Q15 Q2 Q24 Q28 Q5 R14 R52 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jlands:v:10:y:2021:i:7:p:683-:d:583778

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