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Vol 4, No 1(2016): June 2016

Forms of Mortgage Valuation Inaccuracies and Implication on Real Estate Development Finance in Nigeria

  • Oyedeji, Joseph Oyewale
  • Sodiya, Abiodun K
June 2, 2016


Pledging of collateral is a necessary requirement for loan advancement, lenders grant loan based on forced sale value of collateral. Earlier studies on valuation inaccuracy in Nigeria established that valuation inaccuracy is prevalent in the country. It was also established that valuation inaccuracy pose threat to real estate finance in Nigeria. This study examines the forms of valuation inaccuracies in Nigeria and their implications on real estate development finance. The study populations are: Valuers, Developers and Banks. Questionnaires were administered to the study populations to sample their opinion on the most prevalent valuation in accuracy in Nigeria and the implication of valuation inaccuracy on real estate development finance in Nigeria. Descriptive method of statistics and relative importance index were employed for the analysis. It was discovered that overvaluation is the most prevalent form of valuation inaccuracy in the study area and the implication of overvaluation is that it put lenders at risk. Also, the implication of undervaluation is that it denies borrowers the required amount needed for property development. The risk associated with overvaluation make lenders to take different measures that consequently impede accessibility of loan for real estate development purpose. Recommendations were made on how to improve the quality of the services rendered by Estate Surveyors and Valuers in order to reduce rate of valuation inaccuracy in Nigeria.