Author : Sr Yap Kian Ann,
registered valuer & property consultants
August 8, 2026
Property valuation involves mathematical calculations, quantitative analysis and established valuation methodologies. However, it is not a purely scientific exercise. It also requires the professional judgement, experience and interpretation of a registered valuer throughout the valuation process.
From selecting comparable transactions and assessing their reliability to determining appropriate adjustments, assigning weight to the available evidence and arriving at a final opinion of market value, professional judgement plays an essential role in the valuation process.
Unlike disciplines that rely predominantly on scientific laws and repeatable measurements, property valuation deals with a market in which transactions are influenced by numerous variables, individual circumstances and human behaviour.
Property valuation is therefore both an art and a science. Science provides the analytical foundation, while art lies in the valuer’s ability to interpret market evidence, exercise informed professional judgement and arrive at a reasoned opinion of value.
Why Is Property Valuation Not a Pure Science?
The Comparison Method is one of the most commonly used approaches in property valuation. It involves analysing transactions of comparable properties and applying appropriate adjustments to reflect differences between the comparable properties and the subject property.
At first glance, this may appear to be a straightforward mathematical exercise: identify similar properties, compare their transacted prices, make adjustments and apply the resulting rate to the subject property.
In practice, however, property markets do not operate like stock exchanges, where securities of the same class are generally traded in a transparent market with readily observable prices. Each property is unique in terms of its location, characteristics, tenure, physical condition, legal status and development potential. Furthermore, the circumstances surrounding individual transactions may differ considerably.
Consequently, a recorded transaction price does not necessarily represent market value.
Under the definition commonly adopted in valuation practice, Market Value is:
Market Value is the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm‘s-length transaction after proper marketing where the parties had each acted knowledgeably, prudently and without compulsion.
For a further discussion, please refer to our earlier article, Market Value vs Forced Sale Value (https://www.agilitymy.com/insight-en/market-value-vs-forced-sale-value/).
The distinction between a recorded transaction price and market value is fundamental to understanding why professional valuation requires more than mathematical computation.
Natural Imperfections in Recorded Property Transactions
Property transactions are influenced by the individual circumstances, knowledge, motivations and negotiating positions of buyers and sellers. These circumstances may cause the transacted price to differ from the price that would reasonably be expected under the assumptions underlying Market Value.
Examples include the following.
Circumstances relating to sellers:
A seller experiencing financial distress may be particularly eager to dispose of a property.
A seller may have insufficient knowledge of prevailing market prices or appropriate sale terms.
A seller may dispose of a property to a related party, family member, friend or existing tenant at a price that does not reflect prevailing market conditions.
A seller may not have undertaken sufficient marketing to expose the property to the wider market.
Circumstances relating to buyers:
A buyer may be particularly eager to acquire a property within a limited timeframe.
A buyer may have a special interest in the property, such as an adjoining landowner seeking to consolidate land or a business operator seeking a particular location.
A buyer may have insufficient knowledge of prevailing market prices or the terms of comparable transactions.
A buyer may not have undertaken sufficient market research to identify alternative properties or negotiate a more competitive price.
These circumstances illustrate how different prices can be achieved even for properties that are physically similar or located within the same development.
The existence of such circumstances does not automatically mean that a transaction is unsuitable for valuation purposes. Rather, the valuer must assess the transaction’s circumstances and determine whether the recorded price provides reliable evidence of Market Value.
It is therefore inappropriate to determine market value solely by applying a mathematical calculation to recorded transaction prices without considering their underlying circumstances.
This is where the art of valuation becomes particularly important. Registered valuers must exercise professional judgement in selecting comparable transactions, evaluating their reliability, determining appropriate adjustments and deciding how much weight each comparable should carry in the final assessment.
For a more detailed explanation, please refer to our article on the Comparison Method of Valuation (see our article https://www.agilitymy.com/insight-en/comparison-method-of-valuation/).
Artificial Imperfections in Recorded Transaction Data
Beyond the natural imperfections associated with buyers and sellers, recorded property transaction data may also be affected by pricing arrangements or declarations that do not accurately reflect the underlying economic transaction.
For example, in the primary property market, sale and purchase agreement prices may be accompanied by rebates, discounts or other incentives. Unless these incentives are properly understood and accounted for, the reported price may not provide a reliable indication of the effective price paid by the purchaser.
In the secondary property market, there may also be instances of over-declaration or under-declaration of purchase prices.
Consider a hypothetical transaction in which the actual purchase price is RM800,000, but the declared purchase price is RM1,000,000. If a lender applies an 85% loan margin to the declared price, the resulting loan amount would be RM850,000, potentially exceeding the actual purchase price before taking account the transaction’s incidental costs.
Conversely, a purchase price may be under-declared in an attempt to reduce transaction-related taxes or duties such as Real Property Gains Tax and Stamp Duty. Such practices may raise legal and compliance concerns, in addition to distorting the reliability of recorded transaction data.
These examples demonstrate why registered valuers cannot automatically assume that every recorded transaction price represents an accurate and reliable indication of market value.
Asking prices from property portals may provide supplementary market information, but they must also be interpreted cautiously. Asking prices represent sellers’ expectations rather than completed transactions, and the accuracy and authenticity of individual listings cannot always be independently established.
Ultimately, the valuer’s task is not simply to collect data, but to distinguish reliable evidence from information that may be misleading or insufficiently supported.
An Illustration: A Wide Range of Transacted Prices
Agility Valuers & Property Consultants Sdn. Bhd. invites readers to consider the following recorded transactions for units within a residential development in Kuala Lumpur.
Unit 1 – 764sf, transacted at 445psf
Unit 2 – 872sf, transacted at 493psf
Unit 3 – 1270sf transacted at 342psf
Unit 4 – 764sf, transacted at 916psf
Unit 5 – 764sf, transacted at 851psf
The recorded rates range from RM342 psf to RM916 psf, representing a difference of approximately 168% between the lowest and highest rates, measured against the lowest rate.
This is a substantial variation for transactions within the same development. However, the figures alone do not establish why the differences occurred. The variations could reflect differences in transaction dates, unit characteristics, floors, views, conditions of sale, incentives or other factors or potential inflated / under-declared prices. The reliability of the recorded prices would also need to be examined.
A person without sufficient valuation experience might select one of these rates and apply it directly to a property intended for sale or purchase. Depending on the rate adopted, the resulting estimate could differ substantially and potentially expose the parties to significant financial consequences.
A registered valuer must instead investigate the available evidence, assess the comparability of each transaction and determine which evidence is most appropriate for adoption.
This becomes even more important when valuing non-standard properties, such as development land, where factors including planning provisions, development potential, plot size, and market demand may have a substantial impact on value.
Factor Adjustments and the Determination of Their Quantum
Under the Comparison Method, comparable transactions generally require adjustments to account for differences between the comparable properties and the subject property.
Depending on the property type and available evidence, relevant factors may include:
Time of transaction and changes in market conditions.
Location and surrounding environment.
Land area and plot configuration.
Tenure and remaining lease period.
Property type, size and physical condition.
Position within a development, such as a corner lot, end lot or intermediate lot.
Positive and negative site characteristics.
Terrain, accessibility and infrastructure.
Planning restrictions and development potential.
Although adjustments can be expressed numerically, determining their appropriate quantum is not always a straightforward scientific exercise.
For example, a valuer may consider an upward adjustment of 30% for a difference in plot size. This may prompt a reasonable question: why 30% rather than 25% or 35%?
Ideally, the adjustment would be supported by reliable market evidence demonstrating how buyers and sellers price that particular difference while other relevant factors remain comparable (ceteris paribus). However, such evidence may not be available. Property transactions reflect the combined influence of multiple characteristics, and the available data may not permit the isolated measurement of each factor’s contribution to price.
In economic analysis, the principle of ceteris paribus refers to examining the effect of one variable while holding other relevant variables constant. In actual property markets, however, this condition is often difficult to achieve. Two properties that differ in plot size may also differ in location, tenure, accessibility, development potential and other characteristics.
Consequently, it may not be possible to derive a precise, universally applicable percentage adjustment for every factor from the available transactions.
This does not mean that adjustments can be made arbitrarily or that any percentage is equally acceptable. The valuer must exercise professional judgement and relevant experience to determine the quantum of adjustment. Different valuers may reasonably arrive at different adjustments when the evidence is limited or open to interpretation. The art of valuation lies in making these judgements responsibly.
The Valuer’s Professional Opinion of Market Value
A valuation calculation may be mathematically correct while the resulting opinion of value remains unreliable if the underlying evidence has been poorly selected, inadequately analysed or inappropriately adjusted.
The registered valuer must ultimately assess the available information, reconcile the indications of value derived from the relevant evidence and arrive at a professional opinion of Market Value as at the valuation date.
It is also important to recognise that an opinion of Market Value is an estimate made on a specified valuation date under defined assumptions. The actual price subsequently achieved in the market may differ because of changing market conditions, negotiation, exposure to the market and other circumstances.
The objective of valuation is therefore not to guarantee a particular selling price, but to arrive at a well-supported opinion of value that is consistent with the applicable valuation basis and professional standards.
Combining Art and Science: The Valuation of Development Land
The distinction between art and science becomes particularly evident when a registered valuer is engaged to assess the market value of development land for which comparable transactions are scarce.
The scientific aspect involves analysing available transaction data, planning provisions, development costs, market conditions and other relevant information. Where appropriate, the valuer may also employ recognised valuation methods, quantitative models and financial calculations.
The artistic aspect involves interpreting the available evidence, assessing its reliability, determining the relative weight to be assigned to different transactions and exercising professional judgement when quantifying adjustments that cannot be established precisely from market data.
For example, two development land transactions may appear comparable in terms of location and size, yet differ in planning status, permitted density, development constraints or the timing of their transactions. The valuer must determine how these differences affect comparability and how much reliance should be placed on each transaction.
The quality of the valuation depends on the effective integration of both disciplines. Scientific analysis provides structure and consistency, while professional judgement enables the valuer to interpret imperfect evidence and apply it appropriately to the subject property.
Neither discipline is sufficient on its own.
Conclusion: Valuation Is Both an Art and a Science
Property valuation contains essential scientific elements. Market transactions are expressed in monetary terms, valuation methods involve mathematical calculations, adjustments can be quantified, and the valuation process must comply with applicable professional standards, including the Malaysian Valuation Standards where relevant.
However, the art of valuation is equally important because property markets are not perfectly competitive, transaction evidence is not always reliable or directly comparable, and the circumstances surrounding individual transactions may differ considerably.
Registered valuers must therefore exercise professional judgement in selecting comparable transactions, assessing the reliability of market evidence, determining appropriate adjustments and their quantum, interpreting market behaviour, understanding buyer preferences, and assessing the development potential of properties.
At Agility Valuers & Property Consultants Sdn. Bhd., we recognise that reliable valuation requires both analytical rigour and professional expertise. Mathematical calculations and recognised methodologies provide the foundation, while the valuer’s experience, interpretation and judgement determine how the evidence is applied to the property being assessed.
In essence, valuation is a science in its methodology and analysis, but an art in its interpretation of evidence, application of adjustments and professional judgement in arriving at an opinion of Market Value.
Frequently Asked Questions
Property valuation is both an art and a science. Science provides the analytical methods and calculations, while art involves the registered valuer’s professional judgement in interpreting market evidence and determining market value.
Recorded transaction prices may be affected by different transaction circumstances, property characteristics, rebates or unreliable declarations. Registered valuers must assess the reliability and comparability of the available evidence before adopting it.
Adjustments account for differences between comparable properties and the subject property, such as location, land size, tenure, transaction date and development potential, to derive a more appropriate indication of value.
Different valuers may interpret market evidence, assess comparable transactions or determine adjustment percentages differently. However, their opinions should be supported by reasonable analysis, relevant evidence and professional judgement.
A registered valuer has the professional knowledge and experience to assess transaction evidence, identify potential data irregularities, apply appropriate adjustments and provide a reasoned opinion of market value in accordance with applicable professional standards.
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This blog / insight is based on Agility Valuers & Property Consultants / Agility Research (AVPC)’s current understanding and insights about the related topic in the current property / real estate market context. Agility Valuers & Property Consultants / Agility Research (AVPC) makes no guarantees, representation or warranties of any kind, expressed or implied, regarding the information including but not limited to, warranties of content, accuracy and reliability. Interested parties should undertake their own inquiries as to the accuracy of the information. Agility Valuers & Property Consultants Sdn. Bhd. / Agility Research (AVPC) excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss or damages arising therefrom.
Neither the whole nor any part of our blog or insights may be included in any published document, circular, prospectus or statement, nor published in any way without the prior written approval of Agility Valuers & Property Consultants Sdn. Bhd. / Agility Research (AVPC). We shall not be obligated to update this blog / insight in response to changes in market conditions or the regulatory environment subsequently.
For more information, please contact:
Sr Yap Kian Ann
Tel: 603-9544 2694 Email: yap@agilitymy.com
HP : 6012-378 5811 Website: www.agilitymy.com
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