What is a valuer ‘conflict of interest’ and when might a lender not accept one?

Video Transcript

A conflict of interest in a loan security valuation report occurs when a valuer has a personal or financial interest that could influence or appear to influence their impartiality and objectivity in valuing the property. The valuer must disclose any potential conflicts of interest, as transparency is crucial to maintaining professional integrity. If a conflict of interest is identified, the valuer must take appropriate steps, which may include declining the instruction or obtaining written consent from all parties involved after full disclosure. The RICS has strict guidelines for valuers on managing and avoiding conflicts of interest to uphold the accuracy, reliability and impartiality of their reports. Conflicts of interest can arise in several situations, including personal or professional relationships. If the valuer has a personal or professional connection – e.g. friends, family – with a property owner or any other party involved in the transaction, this could create a bias in the valuation outcome. Next, financial interests. If the valuer stands to gain financially from a particular valuation outcome, either through a direct investment or indirect benefit, this could be a conflict of interest. For example, if the valuer owns shares in the company commissioning the valuation, it could influence their objectivity. Finally, prior or current engagements. If the valuer has previously worked for the client or has an ongoing engagement with the client or any involved parties, this could compromise their independence.