Tag Archives: philippine chamber of commerce

Cebu Province acquires AA+ Appraisal services

Cebu Provincial Government has acquired the services of AA+ Appraisal & Consultancy, Inc. to appraise the properties owned by the Cebu Province.

Earlier, Gov. Gwendolyn Garcia said in an interview that she wanted Province-owned real properties reappraised to conform with the present fair market value.

Consultant Agosto said that “It was the biggest assignment that the company had for a local government. Nonetheless, it was not our first time doing appraisal of properties for the government. We already had previous appraisal of properties owned by the Power Sector Assets and Liabilities Management (PSALM) in La Union, Philippine Science High and others.”

Prior to this assignment, AA+ Appraisal & Consulting was also been tapped to help in the revision of the Schedule of Market Value of the Province. “Our company is always  ready to render service to our government as part of our obligation to the community, and also to the people of Cebu.” Consultant Gus Agosto reiterates in a message sent during the submission of the report on January 6,2020.

This is only to show that local governments and other government agencies started to grasp the importance of having a fair market value that is reflected to the present times and done by the experts in the field.#

Importance of Analyzing Market Trends in Real Estate Appraisal

value-riseA market is different from a neighborhood. In choosing comparables and reconciling values, it is worthy to consider the distinction between the two in analyzing market trends. This is vital in real estate appraisal.

A neighborhood is a grouping of complementary land uses. This is a geographical term and includes residential, commercial and even industrial uses within a neighborhood. Meanwhile, a market is the sum total of all competing properties of buyer and sellers in a given area or region under consideration. A market study is focused on competing properties. Therefore, in conducting market analysis one should not limit themselves in analyzing properties in a given geographical unit.

Most appraisers can easily identify appreciating market indicators. Some of which are the undersupply of competing properties and listings; reduced marketing time; an increase in list price than the previous sales price.

The presence of one or all of the indicators would be a signal of market appreciation and the appraiser should consider it in making adjustments and choosing comparables to produce credible reports.

The other method in analyzing the market trend is to distinguish the market if it’s a seller’s market or a buyer’s market.

In a seller’s market where a high level of competition exists, a seller will make concessions which are either non-existent or very minimal. This is in contrast to a buyer’s market where an abundance of competing properties exist and sellers are motivated to offer concessions to stimulate contracts.

A reliable appraisal, especially in dynamic and growing markets such as Metro  Manila and Metro Cebu, must consider real estate trends to offer the most insightful and complete valuation. When in doubt, consult with quality-oriented and experienced valuation professionals that specialize in market analysis.

Why valuation standards are important

I attended a seminar on Philippine Valuation Standards (PVS) recently and spoke to the technical committee members that produce it. The seminar was attended by Assessors of different local government units, nationwide. While the speakers were both members of the Technical Committee on drafting the Philippine Valuation Standards 2017.

I outlined the most important points in the discussion, relate to my experiences in valuation and share it with you.

Enhance the reputation of the profession and be at par around the world. Currently, there are multiple valuation methods used by different government agencies, local government units, private individuals, and banks. Thus it results in as many conflicting values for the same piece of property.

An established set of consistent standards would help in appraising assets and liabilities for financial reporting, especially for companies that control assets in various countries and work across national borders. For valuations for other purposes, the reputation of the profession would be enhanced if the clients could expect consistency in valuation reporting internationally.

Simplify the appraisal process. I work an appraisal for a client in U.S. and Australian federal territories, which typically require different standards. But if an appraiser-member of RICS is performing the appraisal in U.K., it should also comply with RICS standards, which differ in subtle ways.

PVS is the accepted set of standards for valuation in the Philippine setting. Contrary to some notions, it is not only applicable to the government agencies but rather it includes and should also be applied to bank institutions and private individuals.

A single set of standards and guidance notes would enable appraisers to produce a credible valuation with a similar report structure regardless of membership or the location of the asset to be valued.

An era of unified professional standards. There are many associations in the country which offer seminars and training for appraisers. All of this would be simplified through learning and adopting valuation standards. Regardless of which association you align with, the pathway for new appraisers to be a competent appraiser need to be consistent.

 With the Philippine Valuation Standards, the international valuation standards in the broader context, we now have a uniform term of engagements, report disclosures, recognized bases of value, terminology used in reporting and guidance notes.

We have valuation standards that are accepted regardless of location or the professional organization of the appraiser. What we need to do now is to encourage consistency and professionalism, further strengthening the public’s trust in valuations. The first step to this could be asking the members of multiple organizations who are active in the various leadership councils to ensure that their members are actively using the relevant sets of standards in their practice and continually looking for ways to streamline the process in a manner that works for all.

Our generation should be happy to be in the era in which we have now a uniform sets of standards. But there is still work to be done. We should endeavor to unite appraisers in different organizations and location to study, adopt and implement the valuation standards.

In this way, we can raise the level of consistency and professionalism, further strengthening the public’s trust in valuations.

 

Gus Agosto is the Vice-President for Visayas of the Philippine Association of Real Estate Board (PAREB). He is the Managing Owner of AA RealtyPro Solutions, an appraisal and consulting business organization. He also serves as faculty of University of San Carlos, Cebu City and took up Master of Arts in Economics (Candidate) in the same university. 

Due Diligence In Real Estate Transactions

811-Due-Diligence-When-Buying-Real-EstateReal estate transactions involve a significant amount of money and rights of individual. The due diligence process minimizes the risks and provides safeguards against determinable issues that may affect  real estate transaction.

Making the right decision in real estate transactions can be a challenge without complete and accurate information. A traditional legal maxim  “caveat emptor” or “buyer beware” gives more emphasis on the importance of the conduct of due diligence. This is from the traditional rulings that courts would make the buyer stuck with whatever he or she purchased and would have limited recourse. Due to this likely result, buyer had to be extra cautious when making buying decisions.

Due diligence provides  a thorough investigation in a transaction. It helps the buyer have a better understanding about the property, the documents, environment and operational fundamentals of the transaction. This process help in avoiding surprises after the transaction and when the remedies may be limited.

The actual scope of the due diligence process depends on the buyer’s needs and the transaction itself. If the buyer is a developer, he or she may have very different needs than the buyer in purchasing the property for lease or investment. There are individuals who have a pending court case and interested in knowing the property to determine the site and use as evidence in court.

The due diligence process begins by determining the expected use of the property and make this information as a framework. Due diligence seek to address a number of issues and identify important information for buyers. This information includes determining the property’s owners, boundary lines, the rights that come with the sale, the expected future use of the property and highest and best use as development options. The process should identify any issues related to the property title, easements, encumbrances, liens or other hurdles to complete ownership. Additionally, the due diligence process can reveal if there are any restrictions that might affect the use of the property or its development, such as environmental issues, zoning restrictions or legal compliance matters such as abiding by Agrarian Reform Law, NIPAS Act, Agriculture and fisheries Act, road right of way act, government programs and more.

The due diligence process can also reveal information as it is uncovered. For example, the technical description plotting cannot be close may pop up after the document analysis is conducted. Additionally, it is important to determine the real estate market and demographic data to predict the future demands in the area.  Site inspection will determine the actual topography, terrain, shape, boundaries, neighbourhood and existence of any occupants or informal settlers in the property.

Last but not the least is the environmental assessment, to uncover any daunting environmental hazards or issues of the property such as gas leak, wet lands, or use of the property as manufacturing in the past.

Due diligence process is very important. Adequate time must be reserved for this process for thorough and careful study. Party in a transaction should be encouraged to provide specified documents and information to ease the transaction. Be aware of all interests, liabilities, expenses and possible uses for the property.

Due diligence will give parties in transactions to arrive in an informed decision.

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.

Subdivision Development Method

12Land valuation is the most common appraisal assignment. An appraiser uses different method of valuation taking in consideration the purpose of the appraisal. But land differs in sizes, shapes and probable uses that an appraiser should look up to. Land which is large enough has different characteristics that warrants equal if not special attention. Besides, large tract of land requires more data and sets of comparable in using sales comparison method to arrive in a reliable and defensible market value.

An appraisal technique seldom used by appraisers in determining value of large tracts of land is the subdivision or development approach. This technique determines market value by subtracting the costs of developing a potential subdivision from its anticipated proceeds, and discounts the remainder to arrive at present value as of the date of the appraisal.

In using this technique, an appraiser should prepare a subdivision lay-out to determine the number, size and shape of lots. Through research estimate prices of lot; rental rate per square meters if improved with buildings; the development cost and developers profit and the income stream discounted to the present and arrive in its market value.

Often, land value estimates emanating from the subdivision or development approach are significantly lower than those correspondingly derived from the sales comparison approach with a lower lot sizes and different uses. In theory, if both the development method and sales comparison approach were applied correctly, the value estimates should be similar. Nonetheless, the process of reconciliation of different approaches, the appraiser should give weight to the method which is more reliable and justifiable than the other.

In the whole process of the development method of appraisal, the experience, skill and judgment of the appraiser will play with paramount of importance. There are number of methods and techniques available for the appraisers to explore and gain expertise in the practice of profession. Through our innovative effort as an appraiser, we can make an important contribution in popularizing and practicing the subdivision or development approach, in the service of our clientele and to the society.

Cavite Appraisal

 

I appraised properties in Cavite recently. My client, which is an expat living in the US, instructed me to deliver the report within three (3) days for court submission. He gave me only the exact address of the property, the rest will be produced through research.

Early in the morning I travel to Noveleta, Cavite for my first assignment, through the Manila-Cavite Expressway or Cavitex. I arrived in the municipal hall and paid a courtesy call with the Municipal Assessor, then proceed to the site for actual site inspection and research.

Then I went to Trece Martirez City to conduct due diligence for a property under dispute. I visited the site and afterwards went to the City Hall to conduct research and investigation.

I finished the assignment in three days and submitted it. My clients were happy after reading the appraisal report I sent to them.”Thank you for excellent job.”

A commendation that makes an appraiser happy.

Let us now tour Cavite.

Cavite is a province in the Philippines located on the southern shores of Manila Bay in the Calabarzon region on Luzon island. It is bounded on the north by Manila Bay and Metro Manila, on the east by Laguna, on the west by the South China Sea, and on the south by Batangas. It is composed of 7 Cities and 26 Municipalities. With a population of 3,090,691 in 2010, it is the most populated province in the country.

You can reach Cavite from Metro Manila through Aguinaldo Highway and Manila-Cavite Expressway or Cavitex .Situated just 21 kilometers south of the capital, it is one of the most industrialized and fastest growing province because of its close proximity to Metro Manila. Many companies, such as Intel, have established manufacturing plants in numerous industrial parks in the province. As of 2012, there are 382 actively operating companies in Cavite Export Processing Zone.

Major historic events happened in Cavite that shaped Philippines today, if you want to know more about Philippine History, you can visit Cavite and it will be like seeing the history itself not just reading them from Philippine History books.

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ASEAN IS ONE TONIGHT

We welcome 2016, not just a new year, but a new era for our country and other members of ASEAN. ASEAN is one community tonight.

The ASEAN Economic Community endeavors to become a single market and production base. It will unify the 625 Million people of 10 countries under ASEAN as a single community. ASEAN will be connected thru effective air, sea and land links. Further development of regional connectivity will help people, goods and services flow across the region more quickly and cheaply.

ASEAN identifies professions that are allowed to practice in other ASEAN countries. Small-Medium Enterprises (SME) will become more competitive. Those who are open to ASEAN market can expand operations and acquire office space and industrial properties outside the Philippines.

ASEAN community gives us more opportunities. The free movement of goods, services, skilled labor and capital would require more commercial and residential buildings and other infrastructures.

At the same time, it brings challenges to connect. Bigger, skilled and more advanced real estate practitioners from other ASEAN countries can enter the local market. They need local partners and counterparts.

New era requires new mindset and system. It means old habits and comfort zones should be archived. It is an era where connectivity and excellence is a must.

Happy New Year!   Welcome to ASEAN Community.

ASEAN-logo-One-community

PAREB-CESOREB held its first CPD Seminar

PAREB-Cebu South Real Estate Board (PAREB-CESOREB ) successfully held its first Comprehensive Development Program last October 17-18 at Elegant Circle Inn, Cebu City. More than 60 real estate brokers and salespersons participated in the seminar.

Gus Agosto, the President of PAREB-CESOREB, in his speech welcoming the participants highlighted the objective of PAREB-Cesoreb in conducting cpd seminars, “ Pareb- Cesoreb aims to help in raising the bar of real estate professional practice in Cebu.” “Thru seminars, we can produce more and more real estate practitioners who are capable in providing professionalized services to their clients and to the public in general.”

“We learned a lot in the seminar”, one of the participant said. “We are looking for the next set of seminars “, another participant shared.

The two-day seminar were the first set in the series of seminars they will be conducting. The topic of seminars included basic property management, leasing, BIR transactions, business planning, real estate service law and professional ethics.

PAREB-Cesoreb CPD

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Metro Manila Appraisal

It was an honor and privilege to be invited by a prestigious and one of the top appraisers company in the land to join their team in appraising property in Metro Manila.

Truly it adds value to my appraisal skills and in running an appraisal company.

Great experience.

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