The use of reference points in valuation judgment

Experiments reported in this paper clarify and extend results of previous research into the impact of reference points on valuation judgment. The value judgments of expert commercial appraisers from the USA who were not familiar with the geographical setting of the subject property were influenced by a variety of reference points. In order of significance of impact, these influential reference points were: the uncompleted contract price of a comparable property; the uncompleted contract price of the subject property; and the value opinions of other experts. This hierarchy of impact is consistent with both the degree to which each reference point is sanctioned by normative US training and the degree to which each reference point is generally available to US experts. Comparison with previous research suggests that market uncertainty as reflected by geographical unfamiliarity has a role in triggering reference point anchoring.