101 series: Bias in valuation

Highest bias: Valuer starts with a “known” value (A value client has given a target value) Valuer works backwards with the numbers and gives what the client wants.

High bias: Valuer has “monetary interest” on the level of value. When Valuer’s fees shoots up a for higher value, he unearths hidden or premature gold mines of the client’s business and try to attribute value for it, then bias is high — though not as high “known” value .

Moderate bias: Ethical Valuer but has not put enough efforts on investigations. Most often his fees is fixed irrespective of the outcome.

Low bias: Ethical, hard-working Valuer whose fees is fixed.

No bias: This doesn’t exists! Even the maximum unbiased opinion has some inherent bias leaked from the valuation inputs and investigations.