Tips in Litigation Appraisal

downloadI attended a court hearing recently, and when the presiding judge read the facts of the case and the lawyer’s motion to nominate an Appraisal Commissioner, his (Judge) immediate response is “What is the qualification of Mr. Appraiser ?”

An appraiser play an integral role in every part of today’s civil litigation. Litigation appraisal involves taxation, estate planning, expropriation, litigation support, property settlement and others. That is why when selecting a real estate appraiser, a lawyer always perform comprehensive conflict-of-interest checks  on background and qualification before hiring or accepting appraisers.

This conflict of interest check is vital in cases where a lawyer is dealing with large business that offers myriad services and types of clients. While in checking the qualification of an appraiser, a lawyer does it in a profound way through the following attributes such us technical acumen, experience in appraisal, educator and communicator and readiness to appear and have demeanor in court.

Experience in Appraisal – An appraiser should have broad experience in appraisal of different types of properties such us office, retail, warehouse, industrial, apartments, hotels, memorial. Have knowledge in different type of appraisal like fee simple, leasehold or lease fee interest, insurable, retrospective, raw land development method and prospective appraisal.

Technical acumen – associated with professional experience, organizational experience for broader real estate and economic counselling skills capability to solve complex problems requires a greater depth of skills sets. Technical skills are key to an accurate and comprehensive expert report, thoughtful review and critique of the opposing expert report, depositions, and testimony.

Educator and communicator – an appraiser should be ready to explain and discuss  the report in the commissioners meeting or in an open court. A lawyer should pursue in selecting an appraiser’s prior publications and writings. The reasons for examining the expert’s writing are two-fold. First, this type of examination can help a lawyer to further determine the appraiser’s qualifications. Second, how an appraiser presented their arguments and the manner of reasoning and  arrived at their opinion. Is their analysis persuasive? Does the report and opinion make a sense to a lay person?  Have they presented their report in an easy to read and logical manner?

Appearance and demeanor – Lawyer have confidence that the expert will come across as professional and knowledgeable.  At trial or deposition, the appraiser knows the importance of establishing and maintaining credibility, presenting an appropriate appearance and demeanor, remaining composed, considering posed questions carefully, providing a simple and direct answer, giving opinions based on facts, following the standards of generally accepted appraisal practice, being impartial and not advocating for the client, and always telling the truth.

The above characteristics are interrelated. The expert’s qualifications should  matched to the demands of the case as it relates to areas such as property type, experience, or technical requirements. The expert’s ability to articulate his or her position will allow him to better convey his or her skills and qualifications to fellow commissioners, judge, lawyers and other officers of the court. Any aspiring appraiser to be part of this challenging job should muster the above attributes and be of help in our justice system.

See you in court.

Paradise Panglao

Every appraisal assignment gives me an opportunity to visit beautiful places of the neighborhood and nearby tourist spots. This is Panglao island, recognized as one of the premier tourist spot in Central Visayas.

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Took oath anew as Court Commissioner

11150573_1061342033884038_5252473516736476044_nAppraiser Gus took his oath last Friday, September 11, 2015 as one of the Commissioners of a Regional Trial Court in Cebu City. As one of the Commissioner, his duty is to aid the court in determining the exact property affected area and the amount of just compensation to be paid.

“Congratulations to all of you”, the lady judge happily greeted them after the oathtaking ceremony in her office. The other oath-takers were the City Assessor of Carcar, Cebu City and the Clerk of Court.

“I thank the lady-judge and the lawyers who trusted my capacity and chooses me as one of the Commissioner.” Appraiser Gus exclaimed. “With the present composition of Commissioners, the court could render wiser judgment aided by the report of each and everyone of us as Commissioners.”

Appraiser Gus was also chosen as Commissioner by the regional trial court of Lapulapu to determine the fair market value of a property in a dispute. Previously, he also served as an Associate Appraiser in Zonal Revaluation of the BIR Technical Committee in Cebu City.

Appraising Appraisals

As 2014 come to a close, let me share some highlight of major career accomplishments in appraisal.

It was a great leap in my appraisal career. I served clients from different stratum of our society-property owners, lawyers, brokers, accountants, ambassador, company, cooperatives and foreign individuals. More and more assignments means more places visited. It was a year of valuable experiences.

After my stint with Intech Property Appraisal as its Managing Partner, series of assignments and appraisal orders came. My biggest clients were the CFI Multipurpose Cooperative and a subdivision developer. I appraised its properties ranging from vacant lot, residential, and commercial buildings and institutional. The most challenging assignment was a one-hectare residential lot. It was challenging because it has a variety of problems on its title, physical characteristics, occupants and expropriated portion. In addition to the most commonly used methods in appraisal (market data, cost and income approach) I have to use subdivision development method in appraising the said property to draw closer out with the most reliable and accurate value .

In these assignments, I learn a lot of lesson in practicing appraisal. My foundation as a researcher, as an economist and being a real estate broker helps a lot. In every appraisal assignment, I always bear in mind that I should come out with an unbiased and justifiable opinion of value.

The most challenging assignment was to be appointed by a regional trial court as member of the Commission that will study and report the fair market value of a property on trial. It is an assignment where an appraiser has to face the grilling of the judge, lawyers, assessors and other parties. It needs courage draws from experience and technical capability.

Appraisal assignments also mean travel to different places. I visited places and seen faces in different part of the country. Beautiful beaches of Camotes and Bohol, picturesque mountains in Negros and Agusan, scenic islands in Iloilo, native delicacy in Bayawan City- the baye-baye ( I keep looking for laki-laki), Marang in Cagayan de Oro, Binagol in Leyte and more.

It was a great year of raising the level of professional capabilities and experience.

Newly Appointed Court Commissioner

On December 12, Thursday, at 8:30 in the morning a simple oath taking of the Commission took place at the office of Judge Victor Teves, Lapulapu City Regional Trial Court Branch. The Commission was created to determine the fair market value of a property under litigation.

“It is an honor to be part of a body that commissioned by the court and will help in settling dispute”, Gus said after the oath taking.

Dr. Tom Academia , PARCS Executive Vice President said, “Appraiser as commissioned by the court must understand that his principal is the court, not in any of the parties involved and importantly, that position is always unbias in the performance of his appraisal duty. “

Gus is not new to appraisal involving legal proceedings.” I appraised properties already for litigation support”, he said. I helped clients and lawyers in strengthening their legal defense and arguments in court.

Gus was formerly the Managing Partner of Intech Property Appraisal,Inc., a Manila based appraisal company. He appraised different properties-residential, commercial and industrial, in Cebu and Iloilo. He also appraised properties of Cebu CFI Community Cooperative in the Visayas and Mindanao.

A licensed real estate appraiser and broker, he graduated Bachelor of Arts, Major in Economics. He also earned units in Bachelor of Law. Recently, he completed the Real Estate Consultants Review and Seminar given by the Philippine Association of Realty Consultants and Specialists (PARCS).

He is currently the President of Cebu South Real Estate Board, a local board under PAREB or Philippine Association of Real Estate Board.

Experience in Appraisal Matters

In real estate appraisal practice, there are challenges that an appraiser should strive to overcome and characteristics needed to acquire.

Valuing properties requires good judgment. An appraiser can use different methods in valuation, outlined in the international valuation standards. There are different approaches like market data, cost or income approach in valuation. He can also use other approaches like subdivision development approach, residual approach and many more.

But in choosing an appropriate valuation methodology is another thing. The appraiser considers not only the purpose of the appraisal laid out by its client, but the most important, the property’s highest and best use. This judgment emanates from the appraiser’s experience.

Good judgment is also required in analyzing comparables or “comps”. The appraiser identifies the “terms” of the sale – was it an arm’s length transaction in which both parties were equally motivated? Was it a relocation transaction where an owner was attempting to shorten the time on the market to find a buyer? Regardless, no one can tell the appraiser on what comparables to use. It is based on the appraiser’s judgment.

In whatever situation, an experienced appraiser has an edge. He always strive to look for other appraisal methodology and will cull more data on comparables with the sole purpose of rendering an opinion that will truly represents the true market value of the property.

Thus in real estate appraisal practice, experience and good judgment truly matters.

Appraiser as an Expert Witness

Real Estate Appraisers
are often requested to provide an expert opinion as to the value of a property (an appraisal), for the purposes of determining just compensation. In an expropriation proceeding commissioners should at least be appointed to determine just compensation in accordance with the procedure in Section 5 of Rule 67 (Rules of Court). xxx the court shall appoint not more than three (3) competent and disinterested persons as commissioners to ascertain and report to the court the just compensation for the property sought to be

Additionally, appraisers are often requested to conduct an appraisal where the purpose is not explicitly described as being for litigation, but where litigation may result. Examples would be an appraisal completed for eviction cases, divorce proceedings, foreclosure or power of sale, or for civil forfeiture. Although appraiser’s reports are often entered into evidence for court, the appraiser is not necessarily called upon to provide expert witness testimony or to defend the report. However, it is prudent for the client ordering an appraisal to be sure the appraiser is aware of the duty of the expert witness and the court rules for report requirements, prior to engagement for an appraisal assignment.

“It is another area in our profession where we can lend services and specialize in” said Gus Agosto. Gus has been appointed by a lower court in Lapulapu City as a commissioner that will help the court in determining just compensation in expropriation case on trial. He also provided support to lawyers for litigation and court cases like eviction, judicial settlement and divorce.

The appraiser as experts may also provide retrospective appraisals, independent-appraisal analysis, appraisal review , expert witness testimony and litigation-support services in all real property valuation.

When selecting a real estate appraiser for litigation support, knowledge and experience matter. An appraiser should strive to be more knowledgeable and experienced property appraiser in providing litigation support and expert witness services.