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A property valuation is often performed as part of the process of buying or selling real estate.

There is evidence that the regulation of property valuations in Queensland is defective. Valuation problems affect rural properties substantially more than urban properties.

This report:-

• explains how rural property valuations can be unreliable.
• explains how the VRBQ (Valuers Registration Board of Queensland) appears to be ineffective in protecting the public interest.
• provides commonsense advice to buyers and sellers.
• provides a link to a document proposing reforms of the valuation industry in Queensland.
• describes what happened when the reforms were presented to the Queensland government.

Under Queensland's Property Occupations Act 2014, a contract for the sale of property must include a recommendation that the buyer obtain an independent property valuation before signing.

There are many properties with pricetags that are overoptimistic, so an accurate valuation can sometimes help a buyer to persuade the seller to accept a realistic price.

However a property valuation can sometimes be much lower than a fair price. There is much greater scope for rural properties to be undervalued compared with urban properties because valuers enjoy much greater flexibility when valuing rural properties and because urban markets experience a significantly higher number of property sales, making defective valuations stand out more. In contracts of sale, the law does not require any warning statement that property valuations in Queensland can be highly inaccurate.

If a valuation is unfairly low then the seller can make a formal complaint to the VRBQ but this would normally be a waste of a seller's time because a complaint that is upheld cannot lead to any remedy for the seller. Also, the VRBQ appears to be reluctant to deregister shonky valuers.

If a valuation of a rural property is performed for a buyer then the seller should consider whether the main purpose of the buyer is to discover the fair value of the property or whether the main purpose of the buyer is to obtain a low valuation to put pressure on the seller to reduce the price. If a buyer requires a property valuation then, unless a buyer has been compelled to pay for a property valuation because of a mortgage application, the seller should question why the buyer does not do their own research, which would certainly be less expensive and would probably be more accurate.

There are so many potential abuses of the property valuation monopoly in Queensland that substantial reforms are required.



It is fair for a seller to allow the buyer to have a valuation performed provided it is at the buyer's expense. It may be better if a valuation is performed before drawing up a contract of sale as this could save a lot of wasted time for buyers, sellers, agents and solicitors. However, a buyer might not wish to incur the expense of a valuation if a contract is not signed first because the seller might not eventually sign a contract.

If a valuation is performed after a contract is signed then usually the buyer will have a get-out clause in the contract to cover the potential event that the valuation is unsatisfactory, and the buyer also has a statutory five-day cooling-off period after the contract begins.

Most versions of the terms attached to a contract of sale, including the REIQ's standard terms, give the buyer the right to enter the property to perform a valuation. A seller may wish to delete or modify this clause but it would be unrealistic to expect a buyer to agree.

Sellers should be careful not to allow a buyer to insert a clause into a contract of sale that would automatically force the seller to accept a price that is dependent on whatever the valuation turns out to be.

A buyer can do their own research of the property market rather than paying through the nose for a valuation to be performed. This may not suit some buyers but others may find that this strategy gives a more comprehensive and reliable picture of a rural property's relative value in the marketplace, and at a much lower cost.

A seller can also do their own research in advance of putting a property up for sale. A well-informed seller will recognise immediately whether a valuation of their property is fair and reasonable.

If a seller suspects that a low valuation is shonky then there is a high probability that it is deliberately shonky and if so then there is little point in the seller wasting time trying to reason or negotiate with the valuer-assisted bargain buyer. The cost of performing many property valuations that do not result in a substantial price reduction can easily be absorbed by crooks - because when a shonky low valuation does bear fruit the seller may be persuaded to reduce the sale price by many tens of thousands of dollars. Therefore a seller who believes that a valuation is unfairly low should put the property back on the market without delay if the buyer reduces the offer to correspond with the valuation.



To minimise the possibility that a potential buyer will attempt to force the price of a property down by obtaining an unfairly low valuation, a seller can request that the buyer obtains a recent property sales report for the area as a prerequisite before the seller will sign a contract of sale. The seller can then discuss with the buyer the property sales report for the area in relation to other properties that the buyer has inspected. If a buyer is resistant to such discussions or if the buyer claims to have little knowledge of the area or if the buyer expresses unrealistic or unsatisfactory opinions during such discussions then the seller can decline to sign a contract of sale with that buyer.

For whatever reason, a seller may suspect that if a valuation is performed it may turn out to be unfairly low. A seller who has good knowledge of property values probably will not reduce the asking price on the basis of an unfairly low valuation. So, if a potential buyer behaves in a manner that suggests that the buyer's strategy is to obtain a shonky low valuation then the seller should send the buyer on their way without further ado. This will prevent disappointment, avoid wasting a lot of time and avoid having an unfairly low value associated with a property that is worth more.



A property valuation report typically consists of digital photographs, a description of the property, a discussion of recent sales of other properties, an estimated value of the land, an estimated total value of improvements, additional comments and an assortment of disclaimers.

Although a valuation report will show a specific value, each rural property has in fact a range of values. A rural property can potentially be put to many different uses and its value will be different if considered in the light of each different use. A typical valuation report does not consider at all what exactly a buyer is seeking, whereas the value to a buyer of a property depends on what the buyer wishes to use the property for. In other words, the value of a rural property depends on the eye of the viewer. The slowness of rural property markets means that, unlike faster moving urban markets, there often will not be a buyer available who will pay the maximum value that a property is potentially worth. It is therefore odd that valuation reports for rural properties do not show a range of possible values.

The figure stated in a valuation report for the total value of improvements of a rural property can be highly inaccurate. The figure can appear to be plucked out of thin air. The valuer is not obliged to assign a value to each major improvement, so the valuation report usually will not show how the valuer arrived at a value for improvements. Rural properties typically contain many types of improvements, far more than for typical urban properties, for example improvements related to water collection and storage, irrigation, vegetation management, sheds, silos, soils, erosion control, flood control, etc. Property valuations are not an exact science, otherwise valuers would itemise the major improvements and assign a value to each of them. The more types of improvements that there are, the greater will be the cumulative error in assessing their total value.

There are probably few valuers who have real expertise in many of the aspects of rural properties that they are assessing. Valuers are not soil scientists or engineers or agri-economists. For example, few if any valuers possess the engineering and hydrological skills and experience required to make an accurate assessment of the value of structures related to water.

Rural properties are more difficult to value than urban properties because the larger size of rural properties means that there are far fewer property sales in any given area to compare a property with.

Rural properties in the same area are often very dissimilar, sometimes due to having very different histories and a different mixture of improvements, and sometimes due to variability in the land. It is sometimes difficult to find similar properties for comparison.

There are many other problems associated with honest property valuations, but the above should be sufficient to alert unaware sellers. A valuation of a rural property can be substantially wrong by many tens of thousands of dollars, without the involvement of any fraud or dishonesty.



A valuation can be strongly influenced by the opinions of the valuer and also by the opinions of local estate agents that the valuer may consult. The opinions of local agents can be quite arbitrary and can be strongly biased.

The requirement for valuers to obtain valuation opinions from local estate agents is a serious defect within the structure of the property sales industry. Although this requirement may sound useful in theory, in reality valuations might generally be more accurate if valuers were forbidden from obtaining opinions from local agents. If an agent is in a position to have an opinion about the value of a property then that agent must have a conflict of interest because that agent will also have been in a position to list the property and will therefore be a competitor to the selling agent. Indeed, many agents whose opinions are consulted by valuers may actually be listing the same property and therefore they stand to potentially gain if the proposed sale falls through.

Estate agents often have commercial considerations that might cause them to influence valuations with biased opinions. Also, it is common for property valuers to have close associations with particular estate agents.

An example of bias in an agent's opinion of the value of a property is that of a property where the selling agent is a competitor of the agent whose opinion has been sought by the valuer. The consulted agent's opinion may reflect a desire to stymie the sale of the selling agent simply to damage the business of the selling agent, and so the consulted agent's opinion will be biased towards a low value.

Another example of bias is where the agent consulted by a valuer also has the property listed and has a potential buyer who would buy the property at a lower price than the price agreed by the current buyer. Here the consulted agent's opinion is likely to match the lower price that the potential buyer would pay, because this will improve the chances of the consulted agent stealing the sale and the commission.

There are many other circumstances where an agent's advice to a valuer about a property value may be biased due to reasons that are not transparent.



Having looked at what can produce an unfair valuation when the valuation has been honestly performed, let us now consider what a hypothetical dishonest valuer could hypothetically do. Each person should do their own research to judge for themselves whether all property valuers are honest, competent and not associated with any real estate agent in a way that might cause a conflict of interest.

There are various codes of conduct, rules of conduct, codes of ethics, regulations and professional practice standards that a valuer must adhere to if the valuer wishes to avoid all risk of sanction. However, much of the valuer's work is highly subjective and allows considerable scope for making inaccurate or biased observations, inferences and conclusions. A dishonest valuer can use technicalities, ambiguity, selective use of facts and a liberal interpretation of the codes to deliberately create a valuation report that is completely misleading, while at the same time adhering sufficiently to the codes to make it unlikely that any complaint against the valuer would ever succeed.

To justify a low valuation, tricks might include strongly emphasising any minor negative features to give the false impression that they are major issues, exaggerating any genuinely negative features, downplaying positive features, omitting some positive features altogether, making negative comments that are irrelevant and selectively choosing to mention only those recent sales that either achieved low prices or which were irrelevant.

A valuer is allowed considerable scope to pick and choose which recent sales in the same area are relevant, to the extraordinary extent that recent sales of adjoining properties can be omitted altogether from the valuation report without explanation. A valuer is not obliged to specify a distance from the property and a timeframe and then include reasons why each property sale within that distance and timeframe is relevant or not.

There are fundamental differences between rural and urban properties. On practically every issue and feature relevant to rural properties, a dishonest valuer can fabricate a misleading picture without running the slightest risk of any sanction. There isn't the time or space to describe every issue. To take just one example, soil quality is important for large rural properties but is much less relevant for urban dwellings. Many rural properties have a range of soil types, but even an honest valuer does not perform any soil tests at all other than a visual inspection. A valuer can state for example that a property has "sandy soil", which is actually meaningless without any detailed quantitative and qualitative analyses. Sandy soil might mean that the soil has 5% sand or it might have 50% sand, but all that the valuation report will say is "sandy soil". There is plenty of scope for a dishonest valuer to easily create a misleading impression without breaking any laws or regulations.

Another type of fraud is more systematic. If a buyer can find a valuer who can be relied on to consistently produce low valuations then the buyer can go from property to property, having a valuation performed at each, until eventually the buyer finds an unsuspecting seller who will agree to reduce the property price to match the valuation. Even if the buyer has to pay for dozens of valuations to achieve this outcome, the cost to the buyer will only be a fraction of the tens of thousands of dollars of advantage that the buyer will gain as a result of the reduced price.



Valuations tend to err on the side of being too low, because usually it is the buyer who pays for the valuation and therefore only the buyer can sue the valuer for damages if the valuation can be shown to be wrong. If a seller can see errors in a valuation report, the seller cannot sue the valuer because the seller did not pay the valuer anything. For a buyer, the more errors the better, provided that the errors all result in a lower valuation.

Buyers never sue a valuer when a valuation turns out to be much lower than expected. Instead, the buyer will request that the seller reduce the price, which the seller will refuse to do if the valuation is absurdly low. By relying on a valuation instead of doing their own research, a buyer may lose the opportunity to buy a suitable property at a fair price.

Mortgage lenders prefer valuations to be too low rather than too high because lenders are averse to risk. The maximum amount that a lender will lend on a property is related to the valuation and is not related to the sale price. The lower the valuation, the lower the amount of the mortgage and hence the lower the risk for the lender. Valuers who can be relied on to deliver low valuations are therefore more likely to be preferred by lenders than valuers who consistently deliver fair valuations.

There is little doubt that some property buyers who use valuations are more interested in ways to reduce the price than in discovering a fair market price. The fact that buyers seldom if ever sue valuers when a valuation is unexpectedly low is circumstantial evidence that the primary purpose of some valuations is to drive down the price of a property rather than to discover the fair value of the property.

It is not just sellers who need to be wary. Sometimes a valuation can be unfairly high. It has been known in Queensland for a valuer to be in cahoots with the seller, so innocent buyers also need to be wary because occasionally a shonky valuation may be much too high. Also, where a valuer is connected to the selling agent in some way that may not be transparent, there is little probability that the valuation will be too low because a buyer might withdraw from a property purchase as a result of a low valuation and then the agent would not be entitled to a commission.

In summary, if a valuer is not connected with either the seller or the agent then it can confidently be predicted that a valuation of a property will not err towards the high side.



Kingaroar.com has viewed a valuation report that is undoubtedly misleading. The valuation was of a rural property in the South Burnett. Among the report's defects were the omission of any mention about the recent sale of a highly relevant adjoining property and the inclusion of information for comparison about the sale of an irrelevant property located more than 30 kms away in a different property area.



Protection against unfair property valuations is provided by the VRBQ (Valuers Registration Board of Queensland) whose members are appointed by the Queensland government. A link to the VRBQ's website is not provided here because of the frequency that links to websites related to the Queensland government become out-of-date. An internet search should reveal the VRBQ's current website. Nowadays VRBQ is sometimes abbreviated to VRB.

The government claims that the VRBQ has as its primary function the protection of the public through the registration of valuers. However the issues analysed on this page indicate that substantially more could be done to protect the public.

All members of the board of the VRBQ appear to be connected to the real estate industry, with each member being in one or more of the professions of valuer, lawyer, estate agent or property developer. Registered valuers have a lucrative monopoly on performing property valuations. The question arises as to how can an organisation composed of property professionals act in the interests of the general public in relation to the public's dealings with the property profession? Clearly there is a massive conflict of interest. The general public does not appear to be represented in the Queensland government's system of property valuation regulation.

In its designated task of protecting the public, the VRBQ does not actually seem to do very much. For example, it is possible for efficient modern information technology systems to be developed that would help to regulate the valuation industry and which would help to detect and deter most types of systematic valuation fraud. It appears that the VRBQ has not implemented such systems.

In 2010, a search of the website of the VRBQ revealed that the VRBQ's Disciplinary Committee had received surprisingly few complaints about valuers over the previous five years. None of the complaints described in the website led to the deregistration of a valuer. Only one case led to a suspension, for only three months. In another case the valuer admitted guilt but was not even suspended. By 2012, three new cases had been listed, none of which led to the deregistration or suspension of a valuer. In 2013 there were two cases, for each of which the penalty was merely a reprimand.

There seems little point in making a complaint to such a lenient body. Complaints against valuers do not result in the removal of shonky valuers from the valuation system, even though many ordinary people would argue that jail sentences would be appropriate as well as deregistration. There appears to be very little deterrence in Queensland's system of valuer registration. The low number of cases referred to the VRBQ's Valuers Disciplinary Committee is probably related to the absurdity of a complaints system that does not provide any redress to parties injured by a valuer's wrongdoing.

Complaints against valuers cannot undo the real damage that has been caused by a defective valuation. By the time that any complaint has been lodged, investigated and adjudicated the buyer either will be long gone if the valuation was too low or the buyer will have bought the property if the valuation was too high. These are events that usually cannot be rectified. Therefore it is not surprising that the VRBQ receives few complaints because by the time that a complaint has been dealt with it is far too late to do anything about the consequential damage that a shonky valuation has caused. The VRBQ's complaints mechanism does not appear to be appropriately aligned with the public interest.

The leniency that the government of Queensland displays towards those property valuers who are crooked is in sharp contrast to the draconian laws enacted in Queensland against some motorbike riders. If the Queensland government treated crime related to motorbike gangs in the same way that it treats property valuation fraud then a bikie registration board would be set up, all members of the board would be members of bikie gangs, crooked actions carried out by bikie gangs would no longer be criminal offences, and the bikie registration board would be given full control of administering and adjudicating all complaints made against bikie gangs.

For every shonky property valuation there is a winner and a loser. It appears that Queensland politicians of all parties see no reason to provide better protection for the public. This begs the question - Has there ever been a case of a Queensland politician having suffered from being on the wrong end of a shonky valuation?



In January 2010 a request for reform of the valuation industry was submitted to the Queensland government. The proposed reforms are in document Valuation_Reforms_12Jan2010.doc which can be downloaded.

The proposed reforms outline the fraudulent activities that are probably occurring and describe practical ways in which fraudulent activities can be detected and deterred. The proposed reforms include replacing the VRBQ by a body in which no more than one member would be drawn from the real estate industry.

The covering letter accompanying the submission had briefly mentioned a valuation that was questionable. The then Minister for Natural Resources, the Hon Stephen Robertson, appears to have used this as a false pretext to treat the reform submission as a "claim" even though there is no mention of a specific case in the reform submission itself and even though the covering letter carefully explained that the reform submission was not a complaint. Minister Robertson's response was to request that the "claim" be provided to the VRBQ. Minister Robertson did not propose any method of investigation of the "claim" other than by the VRBQ. Minister Robertson did not address any of the issues raised in the reform submission. Minister Robertson stated in writing that "I am not in a position to implement change unless your claim has been fully investigated and a systemic problem identified".

The proposed reforms include the replacement of the VRBQ. Minister Robinson's response in effect said that it is not within the government's powers to implement change unless the VRBQ decides that reform is necessary. It is extraordinary if the government of Queensland has no control over the property valuation industry in Queensland but instead takes its instructions as to what the law should be from the VRBQ. If Minister Robinson's response was correct then the public interest appears to have been usurped by an unelected body that is accountable to nobody but itself.

The reform submission was not a claim or a complaint. The reform submission identified potential systemic problems and ways to detect, prevent and investigate valuation fraud. The submission described information technology systems that would help to detect, investigate and prosecute cases of dishonest and misleading valuations.

In the absence of the systems described in the proposal, it is likely that many types of fraud cannot even be detected. The reform submission clearly shows that systemic valuation fraud could easily be happening undetected. If systemic valuation fraud could be happening undetected then it follows that systemic valuation fraud probably is happening undetected.

The systems necessary to detect many types of systemic valuation fraud for some unknown reason do not appear to exist in Queensland so there can be no proof one way or the other. The blind-eye response of the Queensland government to the reform proposals adds considerable weight to the opinion that reform is necessary.

Usage statistics for this website show that the Reform proposal document and this page about property valuations have been downloaded many times by internet users in some countries that suffer from high rates of crime. This suggests that either this website may be providing some unscrupulous people with a blueprint for carrying out fraudulent property valuation activities, or this website may be providing some law enforcers with a blueprint for fighting the battle against property valuation fraud. If either is true, then this would be further circumstantial evidence that Queensland's regulation of the property valuation industry is fundamentally defective.