Valuation entails the formation of a professional opinion of value based on specific assumptions. Important considerations for the Valuer includes:

  1. The degree of certainty that a given valuation reflects the market realities as well as the features and potentials of the property, and
  2. The opinion of value corresponds to the price that would be obtained on the day of valuation in an arm’s length transaction.


Uncertainty of Valuation may be regarded in the light of

  1. Uncertainty concerning a single valuation assignment, and/or
  2. The difference between multiple valuation reports carried out by different Valuers on same property with physical inspection conducted at the same time and valuation made for the same purpose.

Economic uncertainty implies that the  future outlook for the economy is unpredictable. When people talk of economic uncertainty, they usually imply there is a high likelihood of negative economic events. Economic uncertainty could involve predictions of a higher and more volatile inflation rate resulting from certain factors.

■The emergence of the novel coronavirus (Covid-19) resulting in a global Pandemic, created huge uncertainty around the world. Nigeria, also faced with other economic challenges before covid-19 went into economic recession resulting in serious economic uncertainty for market operators. This as evidenced by the current market volatility in our country for most products especially those with import related elements and valuers operating within this period are experiencing limited to fewer or no comparable market evidence.


Valuation uncertainty should not be confused with risk.

Market Risk

■Risk is the exposure that the owner of an asset has to potential future gains or losses.

■Risk can be caused by actions affecting either the asset itself or the market in which it trades

Examples Include;

■Reduction in market prices of tangible assets shortly after acquisition or valuation (Case in Point –  assets valued for AMCON just before 2015 Nigerian general elections having the market values dropped significantly after the elections in some locations like Abuja, FCT)

■Deterioration in the projected future income of a security – This applies to foreign currency loans backed with local commercial real estate asset.

■Loss of liquidity compared with other assets.

■Cost of maintaining an asset being higher than anticipated – Common in equipment with import related maintenance spare parts.

■The rate of an asset’s technical or physical obsolescence being higher than currently anticipated. 



■This refers to uncertainties that arise as part of the process of estimating value of an asset(s) on a specific date.

■Valuation uncertainty can be caused by the following three broad factors: 

 Market Disruption,

 Input Availability,

 Choice of Method or Model.

■These are not mutually exclusive.  For example, market disruption may affect the availability of relevant data which, in turn, may create uncertainty as to the most appropriate method or model to use.


  1. Market Disruption:

oMay be macroeconomic or microeconomic

oFor coronavirus, the market disruption could be seen as microeconomic, but could also have some macroeconomic implications in the future.

oOther forms of Market Disruption include panic buying or selling,  loss of liquidity due to disinclination of market participants.

oUncertainty caused by market disruption is rarely quantifiable as the impact of the event on the attitude of market participants, and therefore prices, will not be known during its immediate aftermath

  1. 2. Input Availability

oLack of relevant input data will cause valuation uncertainty. This may be due to

oWhen valuation occurs during or immediately after economic or political crisis, significant valuation uncertainties arise because input data available to the valuer will likely relate to the market before the event occurred and therefore have limited relevance to the situation on the valuation date.

oIn the absence of relevant market data;

oExtrapolate inputs from direct observable prices for similar assets  or

oRely on unobservable inputs which can be developed using the best information available about the assumptions that market participants would use when pricing the asset.

oThe valuation method adopted may be used to adjust for input uncertainty


■Most valuations contain an element of uncertainty. IVS 103 only requires this to be disclosed when it is “significant”. Significant assumptions within the valuation approach and methodology should be disclosed within the valuation report.

■When  is valuation uncertainty ‘significant’?  Significance should be considered from two interrelated viewpoints

oWhether the potential impact on the valuation figure is significant

oWhether it is of relevance to an intended user of the valuation


Factors to consider in determining significance of valuation uncertainty include;

■Intended User – Is it for Internal Use or for a third party

■Will the effect of the uncertainty expose the commissioning party or a third party relying on the valuation to significant risk of loss

■Knowledge of  the cause of the uncertainty by the commissioning party or a third party when the valuation was commissioned


■Valuation plays a critical role in real estate practice which we can see in valuation for mortgage, sales, merger and acquisition amongst others.

■The challenges of valuation during and post COVID19 pandemic include but not limited to;

oPhysical Access

oInput Availability: Covid 19 uncertainties reduces number of sales transaction and this will invariably have a directly impact market data availability.

oChanging/Fluctuating Economic Conditions resulting in constant shift in data inputs for valuation on a daily and weekly basis. In some Countries Governments are mandating rental relief.


■During pandemic period, valuation input and metrics usually available are likely to relate to the market before the pandemic and impact on prices post pandemic will not be known until market stabilizes. Therefore,

■Valuers should add special caveat to their opinion of values referencing some of the issues that may adversely impact value opinion in their reports.

■Valuers should make special reference to high valuation uncertainty encountered in completing their reports.

■Valuers should reserve the right to reconsider their advice as events unfold especially if these events are more likely to have a material impact on their opinion of value.

■Valuers should be more open to having transparent discussions with clients as this crisis evolves

■Valuation should include new disclaimers/caveats including those advised by their professional bodies and use available market evidence at the time of valuation.


The outbreak of the Novel Coronavirus (Covid 19) was declared as a global pandemic by the world Health Organization on 11 March 2020. We have seen global financial market and travel restrictions and recommendation been implemented by many countries, including Australia, the real entire market is being impacted by the uncertainly that COVID 19 outbreak has caused. Market conditions changing daily at present.

As at the date of valuation, we consider that there is a significant market uncertainty. This valuation is currently at the date of valuation only. The value assessed here in may change significantly and unexpectedly over a relatively short period of time (Industry as a result of factors that the Valuer could not reasonably have been aware of as at the date of valuation). We do not accept any responsibility or liability for any losses arising from such subsequent changes in value. Given the valuation uncertainty noted, we recommend that the user(s) of this report review this valuation periodically.

“Attach less weight to previous market evidence for comparison purposed, to inform opinion of value. Indeed, the current response to COVID 19 means that we are faced with an unprecedented set circumstances on which to base a judgment and report their valuations. On the basis of material valuation uncertainty, as per VPS3 and VPGA10 less certainty and higher degree of caution should be attached to the (our) valuation than would normally be the case. Given the unknown future impact that COVID 19 might have on the real estate market, we recommend that you keep the valuation of (this property) under frequent review”.


■COVID 19 pandemic has resulted in significant impact with increased uncertainty on property values

■An understanding of uncertainly has always been an integral part of property valuations. No valuation is certain, and the valuer needs to convey to the user of the valuation the degree of uncertainty pertaining to the market value now more than before.

■It is important for valuers to;

oBe clear about the basis of valuation and any assumption made in arriving at opinion of value.

oEstablish the full background to relevant market transactions so that they can be interpreted correctly.

oIdentify the key attributes and risks of the property and explain how they impact value.

o Explain the context of current valuation uncertainty having regards to regulatory guidance note in valuation uncertainty and market instability

■Professional bodies need to advise and provide updates to their members on how to report valuations and market value in the context of material uncertainty.

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