The Problem of Reflecting the Market in the Legal Principles of Real Estate Valuation in Poland. How to Eliminate the “Legal Footprint”?

Abstract This paper presents and subjects to criticism the current principles of real estate valuation, which were introduced in Poland in the 1990’s during the return to a market economy, under the conditions of an underdeveloped real estate market. Against the background of the hypothesis of institutional maladjustment of the methodology to the current level of real estate market development, the author assesses the imitative manner of creating the valuation methodology and its discontinuation in 1998, resulting from the introduction of rigid legal regulations, which have significantly limited the ability of ongoing adjustment of the methodology to the market needs. The paper deals with the problems of defining market value and classifying valuation. The author assumes that the appraisal regarding the market value should be based on a descriptive model of real estate valuation, which should make it possible to reflect the market. He draws attention to the negative effects of valuation methodology which prevents or hinders the mapping of the market in appraisal reports. He proposes a change in the order of the legal principles of property valuation, based on a hierarchical model consisting of three elements: the definition and interpretation of value, the market and the methods of valuation.