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AA+ Appraisal  Celebrates 13 Years of Trusted Real Estate Practice

Cebu City, Philippines – August 2, 2025


Today marks the 13th anniversary of AA+ Appraisal  & Consulting (formerly AA RealtyPro Solutions), a Philippine-based valuation and consulting firm recognized for its commitment to credible, objectivity, and professional integrity. Since its establishment on August 2, 2012, the firm has delivered defensible valuation reports across sectors—supporting legal proceedings, institutional clients, and high-stakes transactions with diligence and impartiality.

From Modest Beginnings to National Footprint

AA RealtyPro Solutions was founded by Augusto B. Agosto, a licensed real estate appraiser, consultant, and educator. Following his licensure by the Professional Regulation Commission (PRC), Mr. Agosto served in leadership roles in national appraisal firms before establishing AA RealtyPro. What began as a general real estate service evolved into a focused valuation practice grounded in standards, documentation, and ethical conduct.

In 2014, the firm formally entered the valuation profession. Among its earliest corporate clients were General Milling Corporation and Classical Geometry Export Corporation. Its track record expanded when Cebu CFI Community Cooperative, one of the largest cooperatives in the region, appointed the firm to appraise its extensive property holdings—a defining milestone in AA RealtyPro’s institutional credibility.

Valuation for the Courts and the Public Interest

AA RealtyPro Solutions is widely regarded for its expertise in litigation-related valuation. In November 2014, Mr. Agosto was appointed Appraisal Commissioner by the Regional Trial Court of Lapu-Lapu City, marking the firm’s entry into judicially recognized appraisal work. Since then, it has prepared court-admissible valuation reports in cases involving:

  • Just compensation and expropriation
  • Property partition and estate settlement
  • Reconstitution, annulment, and boundary disputes
  • Housing development

The firm’s reports follow the Rules of Court, comply with RESA (RA 9646), and meet standards of independence, clarity, and verifiability—core principles of credible appraisal practice. Its work has aided both courts and counsels in resolving technically and legally complex property disputes.

Educating Professionals and Upholding Ethical Standards

Mr. Agosto serves as a faculty member in real estate and tax law at Trinity University, Philippine Christian University, Gardner College, Lyceum of Alabang, Cronasia College and the University of San Carlos and leads professional development programs on document analysis, adjustment methodology, and valuation reporting. Through lectures, bootcamps, and public speaking engagements, he has helped shape a generation of real estate professionals to value not just property—but truth, responsibility, and evidence-based judgment.

He is also the founding president of the Society of Litigation Valuation Experts (SOLVE), a body committed to raising ethical and technical standards in valuation. In 2024, he contributed to the Implementing Rules and Regulations (IRR) of the Real Property Valuation and Reassessment Act (RPVRA), with a focus on litigation standards, revaluation intervals, and LGU-based valuation systems.

Expanding Nationally, Maintaining Credibility

Since 2017, AA RealtyPro has expanded its service coverage from Cebu and the Visayas to Metro Manila and Northern Luzon, undertaking assignments for:

·  Commercial buildings and condominiums in NCR

·  Institutional properties including schools and universities

·  Industrial assets including warehouses with equipment and machinery

·  Foreshore lands, easements, and properties with encumbrances

  • Consulting works for multilateral agencies and international institutions

Its valuation portfolio spans residential, commercial, industrial, and special-use properties, serving a diverse clientele nationwide. Beyond appraisal, the firm is also engaged in real estate consulting, feasibility analysis, and property-related studies that inform investment, development, and legal decisions. These services are delivered with meticulous documentation, well-grounded assumptions, and defensible analysis—ensuring that each report upholds the highest standards of technical accuracy and professional credibility.

In select engagements, AA Appraisal integrates environmental and locational research, particularly in land use-sensitive and resource-regulated properties, further enhancing the reliability and contextual relevance of its advisory work.

Trusted. Impartial. Defensible.

AA RealtyPro Solutions maintains a clear ethical position on conflict of interest and professional boundaries. The firm avoids dual roles in brokerage and appraisal, ensures the confidentiality of client data, and practices valuation strictly in accordance with the International Valuation Standards (IVS).

Its founder continues to engage in both local and international training, including the Complex Properties Valuation Program in Thailand and speaking roles at the FIABCI Asia-Pacific Convention and the upcoming Resort Valuation Forum in Pattaya.

 Moving Forward: A Commitment to Truth and Credible Insights

As AA RealtyPro marks its 13th year, it reaffirms its core mission:

“To deliver impartial, legally compliant, and analytically sound valuation and consulting services that support public trust, judicial clarity, and institutional transparency.”

With every appraisal assignment, the firm aims not only to determine property value—but to uphold professional truth in service of the public, the courts, and the profession.

Gratitude and Acknowledgment

To all clients, counsels, institutions, and colleagues who have placed their trust in AA RealtyPro Solutions—thank you. Your confidence inspires our continued pursuit of credibility, clarity, and contribution.

AA RealtyPro Solutions
Established August 2, 2012
“Trusted Insights. Defensible Reports. Ethical Practice.”

Why Title Annotations and Encumbrances Matter in Property Appraisal

❝ In valuation, the fine print on the title can be as valuable—or as dangerous—as the land itself. ❞

In real estate appraisal, numbers alone do not tell the whole story. A property’s legal status—particularly the annotations and encumbrances appearing on its title or tax declaration—can drastically alter its worth. While some may view these legal markings as mere notarial footnotes, a seasoned property appraiser understands that such entries are crucial to determining the property’s true value, marketability, and risk profile.  One of the most important but sometimes overlooked aspects of valuation is the presence of annotations and encumbrances on the property’s Transfer Certificate of Title (TCT), Original Certificate of Title (OCT), or Tax Declaration. These annotations—whether involving tax delinquency, pending litigation, or other restrictions—can drastically alter a property’s value, marketability, and highest and best use (HBU). For the professional appraiser, understanding and correctly interpreting these legal markings is essential, not optional.

Why Appraisers Must Pay Attention

There are several compelling reasons why a diligent appraiser must care about annotations and encumbrances.

First, these legal burdens directly affect market value—the core product of any appraisal. Buyers in the open market are generally unwilling to pay full price for a property encumbered by unresolved claims, legal disputes, or forfeiture risks. Appraisers must therefore consider how each annotation may cause potential buyers to either walk away or demand a discount.

Second, legal risk translates to value risk. Annotations such as a lis pendens, adverse claim, or a writ of attachment signal potential issues with ownership, possession, or future usability. Even if a property looks physically sound, a legal cloud on its title will make it less attractive and inherently riskier. Prudent appraisers account for this by adjusting their valuation assumptions, often applying a discount or issuing a qualified opinion.

Third, these annotations frequently affect the property’s highest and best use (HBU)—a foundational concept in valuation. If a property is subject to restrictive covenants, reversionary clauses, or foreshore lease limitations, its legal permissibility for development or other productive use may be severely constrained. The appraiser must therefore revise the HBU analysis and its associated value estimate accordingly.

Fourth, annotations impair a property’s marketability. For instance, a property that has been auctioned off for tax delinquency but is still within the redemption period cannot be sold with confidence. Similarly, if a property was inherited but the title transfer is not yet perfected, there may be co-heir disputes or administrative delays. In both cases, the property may be legally transferable only in theory, but not in practice—at least not without cost or time delays.

Fifth, annotations affect the property’s loanable value or equity value. Banks and other financial institutions are wary of lending against titles that carry risks. For example, a property mortgaged beyond its current market value or encumbered with a lien from unpaid taxes may only be eligible for partial financing, or worse, may be rejected altogether as loan collateral. This has direct implications for the appraiser’s task in estimating not just market value, but the net realizable or mortgageable value.

Finally, ignoring these factors may violate the appraiser’s professional and legal responsibilities. Under the Real Estate Service Act (RA 9646), the appraiser is required to exercise due diligence and report all material conditions that affect the value of the property. International Valuation Standards (IVS) and the Uniform Standards of Professional Appraisal Practice (USPAP) similarly require full disclosure and the proper interpretation of legal burdens. Failing to do so may expose the appraiser to liability, loss of license, or reputational damage.

Understanding the Specific Impact of Common Annotations

To make these risks and responsibilities more concrete, let’s examine how common annotations and encumbrances impact valuation:

A Notice of Tax Delinquency or Forfeiture carries a negative impact on value and significantly impairs marketability due to the risk of government seizure. When a Certificate of Sale appears on the title—typically following a tax auction—the buyer only has conditional ownership until the redemption period lapses. This also warrants a discounted valuation and caution in reporting.

A Lis Pendens indicates that the property is subject to ongoing litigation. Its presence severely impairs marketability and imposes legal uncertainty, which in turn reduces value. An Adverse Claim similarly signals a third-party interest in the property that contradicts the titleholder’s claim. While not always litigated, it still creates hesitation for buyers and lenders, pulling values downward.

A Levy or Writ of Attachment represents a judicial restriction. Courts attach the property to secure a possible judgment, and while the property is not yet seized, its transferability is legally curtailed. This justifies a risk adjustment in the valuation.

If the title carries a Foreshore Lease or a Department of Environment and Natural Resources (DENR) annotation, it usually means that the property is within the public domain (such as coastal or reclaimed land). Ownership is limited to leasehold rights, not fee simple. This not only reduces the appraised value to the leasehold interest but also conditions its use based on government regulation.

An Affidavit of Loss or Reconstitution of title temporarily affects the property’s marketability, especially if the reconstitution process is incomplete. Although this may only have a neutral to slightly negative impact on value, it still warrants disclosure and may be included as a limiting condition in the report.

A Real Estate Mortgage (REM), if current and performing, generally has a neutral impact on market value, assuming the appraisal is for market purposes and not equity extraction. However, the appraiser must still distinguish between total market value and the equity portion when applicable.

An Easement or Servitude, such as a right of way or drainage restriction, slightly reduces the value and may condition the property’s utility. If the easement affects buildable area or accessibility, this becomes a material consideration.

Reversion clauses or restrictive covenants are more serious. These limit future development, prohibit certain uses, or allow the property to revert to a former owner under certain conditions. As these significantly constrain HBU and market flexibility, they usually result in a negative value adjustment.

Lastly, annotations involving Deeds of Donation, Inheritance, or Partition may suggest that the property was recently transferred or is part of a co-ownership arrangement. If the legal transfer is incomplete or the estate is unsettled, the title remains in flux. This affects both value and marketability, particularly if there is a risk of future claims or if the sale requires consent from multiple parties.

In real estate valuation, legal clarity is just as important as physical condition. Title annotations and encumbrances represent real risks, limitations, and burdens that influence the value of a property. Whether through discounted sales, delayed transactions, restricted use, or diminished loanability, these legal notations affect how market participants perceive and engage with real estate assets.

The professional appraiser must go beyond mere physical inspection and apply legal awareness, risk sensitivity, and valuation expertise to provide credible, well-supported opinions of value. Every annotation tells a story—of ownership, encumbrance, or uncertainty—and the appraiser must read, interpret, and reflect that story in the appraisal report.

Property Identification: The Sacred Foundation of Real Estate Appraisal

In the meticulous world of real estate appraisal, one principle stands above all others: you cannot value what you cannot identify correctly. Whether working on a condominium in Makati, a farmland in Bukidnon, or a contested estate in Cebu, the first and most sacred duty of any appraiser is to accurately and defensibly identify the subject property. This is not just a technical requirement—it is the foundation of credibility, legality, and fairness in valuation. A mistake in property identification is not a small error. It invalidates every step that follows: the market comparison, highest and best use analysis, risk assessment, and final value estimate. Simply put, wrong property means wrong valuation.

Property identification involves several components. It means correctly determining the legal identity of the land—via Transfer Certificate of Title (TCT), technical description, and lot number. It also means identifying the actual physical location and ensuring it matches the documents, zoning classification, and any physical improvements or encumbrances. Every valuation method—whether it’s the market approach, cost approach, or income approach—relies on this first step. If you appraise the wrong lot, all your calculations, assumptions, and conclusions become legally and factually meaningless.

This is why misidentification carries not only technical consequences but also legal and ethical ones. A wrong appraisal can lead to court rejection of the report, denial of loans by banks, and even legal liability for misleading courts or clients. Under Article 19 of the Civil Code of the Philippines, professionals have a duty to act with justice, give everyone their due, and observe honesty and good faith. The Philippine Valuation Standards likewise emphasize that appraisers must exercise due diligence and care—beginning with accurate property identification.

Some of the most common pitfalls in this process include relying solely on the owner’s verbal claim without matching it against documentary evidence, misplotting technical descriptions, failing to check for easements or encroachments, and confusing adjacent lots with similar features. These errors are preventable with a disciplined and documented approach. A responsible appraiser will cross-check TCT data with the tax map and zoning ordinance, conduct field validation through site visits, use geotagged photos or drones, and even consult barangay officials or boundary markers when in doubt.

The risks of inaccuracy are very real. Imagine an appraiser tasked to value Lot 6 but instead inspects and reports on Lot 5. If Lot 5 is under threat of expropriation or prone to flooding, while Lot 6 is not, the valuation will be drastically wrong. In judicial proceedings, such a mistake may result in an unjust award of compensation or legal challenge. In lending, it may lead to defective collateralization. The appraiser’s name—and the integrity of the profession—are on the line.

Property identification is not just a preliminary step—it is the moral compass of professional practice. It sets the tone for the accuracy, fairness, and trustworthiness of the entire report. Real estate is a high-stakes industry. The margin for error is slim, and the cost of error is great. That is why we say: Property identification is sacred. Wrong property is wrong valuation. Always.

Housing Paradox

In recent months, news reports have painted a troubling picture of Metro Manila’s condominium market. The oversupply of residential units has reached concerning levels, raising questions about market stability and prompting analysts to propose various recommendations. While analysts focus on strategies to address the oversupply, there has been little to no effort to connect this phenomenon with the broader issue of unmet housing needs. This creates a puzzling paradox -on one side of the real estate spectrum, developers are grappling with excessive inventory in urban centers. On the other side, millions of Filipinos still lack access to adequate, affordable housing.

The stark imbalance highlights a deeper, systemic problem within the housing sector: a misalignment between supply and demand, where the needs of the population are not being met despite the abundance of residential units.

Currently, the oversupply in the condominium market translates to about 34 months of inventory at the current sales pace—nearly three times the ideal benchmark of a 12-month supply. Urban centers like Quezon City, Ortigas, and Pasay are particularly affected, with thousands of unsold units. For example, Quezon City alone has 18,500 available units, followed by Ortigas with 13,500 and Pasay’s Bay Area with 10,500. Meanwhile, high-end areas like Makati and Bonifacio Global City maintain lower inventories, reflecting steadier demand in the luxury segment.

The reasons behind this oversupply are multifaceted. High interest rates, external economic pressures, and shifting consumer preferences towards single-detached homes in suburban areas have all played a role. Developers, driven by the high returns in the mid- to high-tier condominium market, have focused on urban centers, inadvertently creating a bubble of excess inventory in certain locations.

On the other side of this paradox lies the staggering national housing backlog of 6.5 million units. This deficit primarily affects low- to middle-income families who cannot afford the properties being developed. In Central Visayas alone, the housing need is over half a million units, and while government programs like the Pambansang Pabahay para sa Pilipino Program (4PH) aim to address the backlog, progress has been slow. For instance, in Central Visayas, the Department of Human Settlements and Urban Development (DHSUD) has set a modest target of 13,000 housing units under 4PH—far from the region’s actual needs.

This paradox underscores a severe mismatch between the type of housing being supplied and the housing people need. The oversupply is concentrated in mid- to high-tier condominiums in urban areas, which are unaffordable to most Filipinos. Meanwhile, the housing backlog affects families who struggle to find even basic, affordable shelter. Rapid urbanization has driven developers to focus on city centers, where demand for high-end properties has slowed, while the needs of provincial and low-income communities remain unmet.

This misalignment has wide-ranging implications. Developers face financial losses as unsold inventories pile up, while families without access to affordable housing continue to live in substandard conditions. The situation also affects the broader economy, as stagnation in urban property markets and inadequate housing solutions limit economic mobility and growth.

To address this complex challenge, a coordinated effort is needed. Policymakers, developers, and stakeholders must work together to realign the market. Incentivizing developers to prioritize affordable housing, particularly in areas with high backlogs, is essential. Improving transportation infrastructure to make suburban housing more accessible can also help ease the concentration of developments in urban areas. Additionally, accessible financing options for low- to middle-income families, public-private partnerships, and stricter regulations to prevent future oversupply are crucial steps.

The coexistence of housing oversupply and a massive backlog highlights fundamental flaws in the Philippine real estate market. Solving this paradox requires a shift in priorities—from catering mainly to profit-driven urban developments to addressing the genuine housing needs of the majority. By doing so, the sector can foster sustainable growth, improve living conditions, and create a more equitable future for all Filipinos.

The solution to the Philippine housing paradox lies not in shifting the focus of condominium developments to other regions but in prioritizing the unmet demand for affordable housing. The fundamental issue is not merely the geographic concentration of real estate projects but the failure to align supply with the genuine needs of the population. Addressing this misalignment is key to resolving both the oversupply and the housing backlog.

Augusto B. Agosto is a passionate blogger, economist, university professor, and thought leader in real estate and urban development. With extensive experience in analyzing economic trends and real estate dynamics, he offers insightful perspectives on pressing issues such as housing, land use, and property market trends in the Philippines.

Consultant Gus Agosto to Speak at World Congress

The world of resort properties is rapidly evolving, and industry leaders from across Southeast Asia will come together to share insights and strategies at the World Congress on Resort Properties, happening from December 1-3, 2024, in Pattaya, Thailand. Among the distinguished speakers is Consultant Gus Agosto, a renowned expert in real estate valuation and development, who will contribute his expertise alongside speakers from Malaysia, Vietnam, Maldives, Brunei, Cambodia, Laos, India, the Philippines, USA and Thailand.

The World Congress on Resort Properties will serve as a pivotal platform to explore the dynamic sector of resort real estate, which encompasses seaside resorts, mountain retreats, rural-style accommodations, pool villas, hotels, and wellness-focused developments. As the demand for unique and luxurious vacation experiences continues to rise globally, resort properties are increasingly becoming a prime investment choice.

Topics That Matter

With its theme focusing on “How to Plan, Value, Manage, Buy, and Sell Resort Properties,” the congress aims to provide actionable insights to investors, developers, real estate professionals, and industry stakeholders. Attendees can expect to learn about:

  • Strategic Planning: Understanding market trends and consumer preferences to create sustainable and profitable resort developments.
  • Valuation Techniques: Key factors influencing the market value of resort properties and tools for accurate valuation.
  • Effective Management: Strategies for managing operations while enhancing guest experiences.
  • Investment Opportunities: Insights into buying and selling resort properties, with a focus on long-term profitability.

As the global tourism industry continues to recover and thrive, resort properties are playing an increasingly significant role in boosting economies and creating employment opportunities. This congress will foster dialogue on how to address emerging challenges, seize new opportunities, and embrace innovation in the sector.

This invitation to the World Congress is a testament to Consultant Gus Agosto’s growing influence in the real estate industry, particularly in hotel and resort valuation and consulting. Just a few months ago, Gus was invited to speak at the prestigious FIABCI Thailand Congress 2024 Asia Pacific Real Estate Convention & Property Prix d’Excellence Awards held on August 30-31, 2024, at the Amari Bangkok Hotel. His presentation at that event focused on key trends shaping real estate markets across the Asia-Pacific region, further solidifying his reputation as a sought-after speaker and consultant.

Valuation as a Multidisciplinary Practice

Valuation is a cornerstone of informed decision-making across industries, including real estate, agriculture, manufacturing, and engineering. It involves assessing value for various purposes, such as sales, taxation, insurance, and investment. Given its complexity, valuation has emerged as a multidisciplinary practice, bringing together professionals from diverse fields to ensure accuracy, reliability, and comprehensive results.

In the Philippines, various laws regulate professionals involved in valuation, ensuring that each operates within their defined scope of expertise. Real estate appraisers are governed by Republic Act No. 9646, also known as the Real Estate Service Act of the Philippines. This law establishes the standards for the licensure, practice, and professional conduct of real estate appraisers, granting them the authority to assess and determine the value of real estate properties, including land, buildings, and improvements.

For agricultural and biosystems engineers (ABEs), their practice is regulated by Republic Act No. 10915, the Philippine Agricultural and Biosystems Engineering Act of 2016. This law authorizes ABEs to perform valuations of agricultural and biosystems machinery, equipment, structures, and facilities, as well as agricultural engineering projects such as irrigation systems and farm infrastructure. Joint Resolution No. 1, Series of 2022, further clarifies the complementary roles between ABEs and real estate appraisers, stating that ABEs’ valuation reports for agricultural assets can serve as references for real estate appraisers when valuing agricultural properties.

Mechanical engineers, on the other hand, are governed by Republic Act No. 8495, known as the Philippine Mechanical Engineering Act of 1998. This law allows mechanical engineers to engage in the valuation of mechanical systems and equipment, such as HVAC systems, boilers, power plants, and other industrial machinery. Their valuations typically focus on the technical and operational aspects of machinery, assessing factors like depreciation, replacement costs, and operational efficiency, particularly in industrial or commercial properties. Similarly, other specialized professionals, such as electrical engineers regulated under Republic Act No. 7920 (The Philippine Electrical Engineering Law), contribute to the valuation process, particularly for properties with complex electrical systems. Architects, regulated by Republic Act No. 9266 (The Architecture Act of 2004), may also be involved in valuing buildings and structures, focusing on the design and construction aspects of real estate.

Each of these laws ensures that professionals work within their areas of expertise, providing accurate and legally compliant valuations. While real estate appraisers focus on the overall property value, agricultural and biosystems engineers and mechanical engineers bring specialized knowledge to appraise agricultural systems, machinery, and industrial equipment. Their collaborative roles, as outlined in Joint Resolution No. 1, Series of 2022, ensure that properties with specialized components, such as agro-industrial estates, are valued comprehensively and accurately. This multidisciplinary approach, guided by their respective laws, guarantees a thorough and credible valuation process that benefits all stakeholders involved.

Real estate appraisers are at the core of property valuation, focusing on land, buildings, and other real estate. They assess market conditions, zoning laws, and property improvements to provide a comprehensive valuation report. Their work is primarily guided by RA 9646 in the Philippines. However, in properties with specialized components, such as agricultural systems or mechanical infrastructure, real estate appraisers often rely on the input of other professionals. Agricultural and biosystems engineers, for example, are authorized under RA 10915 to assess agricultural assets like irrigation systems, silos, and other farm-related infrastructure. Their specialized knowledge is particularly crucial when valuing agricultural properties or agro-industrial estates. Similarly, mechanical engineers, as outlined in the Philippine Mechanical Engineering Act, can assess the value of mechanical equipment and machinery, such as HVAC systems, boilers, and industrial machines. These engineers evaluate factors like depreciation, operational value, and replacement costs, which are important for properties with significant mechanical infrastructure.

The interplay between these professions ensures a comprehensive approach to valuation. For example, in industrial properties, mechanical engineers evaluate the machinery and systems, while real estate appraisers integrate these technical valuations into the overall property value. In agricultural settings, ABEs assess farming equipment and infrastructure, and real estate appraisers consider these factors alongside land and property values to determine the total worth. The collaboration of these professionals leads to more accurate and thorough appraisals, addressing both the real estate and specialized components of a property.

This multidisciplinary approach to valuation offers numerous benefits. It ensures accuracy, as each expert contributes their specialized knowledge to different aspects of the property. It also provides a comprehensive valuation, incorporating everything from land value to the worth of machinery or agricultural systems. Moreover, it guarantees regulatory compliance, as each professional operates within their legal scope—real estate appraisers under RA 9646, and ABEs and mechanical engineers under their respective laws. Finally, it fosters stakeholder confidence, as the valuation reports produced are detailed, reliable, and credible, providing property owners, investors, and other stakeholders with the information they need to make informed decisions.

Why Combining Brokering and Valuation Creates a Conflict of Interest

In the real estate industry, professionals often wear multiple hats to meet the diverse needs of clients. Brokers facilitate the buying, selling, or leasing of properties and earn commissions based on the transaction’s value. Appraisers, on the other hand, provide impartial, accurate property valuations that are essential for informed decision-making by buyers, sellers, lenders, and investors. Although these roles complement each other, combining them under a single practitioner can create significant conflicts of interest that undermine the integrity of both professions.

The core issue lies in the divergent motivations of brokers and appraisers. Brokers are incentivized by the commission, which is tied to the value of the property and the success of the transaction. This financial motivation can lead brokers to manipulate property valuations—either inflating the value to secure a sale or undervaluing a property to expedite the transaction. Such actions may benefit the broker but distort the true market value and could ultimately harm other stakeholders, such as lenders or buyers.

In contrast, appraisers are expected to provide unbiased, objective property valuations. Their work should be independent and based solely on the property’s characteristics, market conditions, and other relevant factors, without any external influences. When an individual engages in both brokering and appraising, it raises concerns about the integrity of the valuation and the possibility that the dual roles could influence the professional’s objectivity, judgment, and ethical decision-making. Their financial interest in closing the deal could lead to a questionable and potentially inflated or deflated property value.

A few weeks ago, a client requested our company to sign a non-disclosure agreement (NDA) to ensure the confidentiality of the information they would provide, we reassured them that confidentiality is a cornerstone of our professional practice. Not only do we strictly comply with the Data Privacy Act of the land, but we also adhere to the ethical principles outlined in the International Valuation Standards (IVS). These guiding frameworks collectively reinforce our commitment to safeguarding client information, maintaining impartiality, and upholding the highest standards of professional integrity.

As a company that handles sensitive and proprietary client information, we strictly comply with the Data Privacy Act. This legislation mandates the secure handling, processing, and storage of data to protect it from unauthorized access, misuse, or breaches. Our compliance ensures that every piece of information entrusted to us is treated with utmost care and responsibility.

Recognizing this inherent conflict of interest, the Real Estate Service Act (RESA) of the Philippines, which governs the practice of real estate services in the country, mandates the separation of the real estate broker and appraiser professions. RESA ensures that each profession operates independently, preserving the integrity of their respective roles. The law encourages individuals to specialize in either brokering or appraising, which safeguards both professional accountability and the quality of services provided to clients. By doing so, RESA helps maintain public trust and transparency in real estate transactions.

The separation of these professions also aligns with global best practices, such as those outlined in the International Valuation Standards (IVS). These standards emphasize the importance of ethics, integrity, and impartiality in valuation practices. By keeping brokering and appraising distinct, the real estate industry can better ensure that valuations remain objective and reliable, upholding the public interest and minimizing any potential conflicts of interest.

Refining Property Valuation with Automated Valuation Models

In today’s digital age, Automated Valuation Models (AVMs) are reshaping the property valuation landscape, providing swift and reliable property assessments. Powered by artificial intelligence (AI) and advanced data analysis, AVMs leverage sophisticated analytical tools to capture market complexities and support informed decision-making. As the real estate market becomes more dynamic, advanced tools like Vector Autoregression (VAR), Vector Error Correction Model (VECM), Principal Component Analysis (PCA), and Regression Analysis have become integral to refining AVM accuracy, allowing for precise valuations across diverse property types and locations.

AA+ Appraisal & Consultancy, a leader in real estate appraisal and consulting services, is committed to continuously applying and advancing technology in its analysis and client services. By incorporating these advanced tools, AA+ Appraisal & Consultancy enhances its ability to provide clients with precise, data-driven insights, addressing real-time and long-term market conditions with accuracy and expertise.

The Role of Advanced Analytical Tools in AVMs

AVMs utilize mathematical and statistical models to assess property values based on historical sales, market conditions, and macroeconomic factors. Advanced analytical tools now enhance these valuations by addressing real-time and long-term market shifts, key economic impacts, and local variations. For instance, VECM aids in analyzing how broader economic conditions influence housing prices, while PCA identifies primary factors influencing land values in urban areas like Cebu City. By incorporating these specialized tools, AA+ Appraisal & Consultancy’s AVMs provide nuanced insights that cater to different stakeholders—from investors to homeowners.

Key Analytical Tools Elevating AVM Precision

  1. Vector Autoregression (VAR)Vector Autoregression (VAR) is a statistical model used to analyze time series data, making it ideal for short-term market predictions. In AVMs, VAR forecasts fluctuations based on interactions between variables, such as interest rates and inflation, which directly impact property prices. This allows AA+ Appraisal & Consultancy’s AVMs to capture short-term changes, providing users with up-to-date, responsive valuations. In volatile markets, where economic indicators shift rapidly, VAR enhances AVM adaptability, ensuring that valuations reflect current economic dynamics.
  2. Vector Error Correction Model (VECM)The Vector Error Correction Model (VECM) is essential for analyzing data with long-term equilibrium relationships. By examining macroeconomic determinants, VECM can analyze how factors such as GDP, employment, and income levels influence housing prices over time. AA+ Appraisal & Consultancy applies VECM to assess both macroeconomic impacts on housing prices and the relationship between the real estate market and the stock market, offering insights into how these sectors interact within investment portfolios. For those assessing long-term investments in the housing sector, VECM enables AVMs to incorporate macroeconomic drivers, providing grounded, long-view property valuations aligned with broader economic cycles.
  3. Principal Component Analysis (PCA)Principal Component Analysis (PCA) is a powerful dimensionality-reduction tool that isolates key variables driving property values. In densely populated regions, property values can be influenced by numerous factors, from access to transportation to neighborhood amenities. In Cebu City, AA+ Appraisal & Consultancy applies PCA to identify the main determinants of land value, allowing AVMs to focus on the most influential data points and deliver precise, region-specific valuations. In urban markets, PCA allows AVMs to focus on the most impactful factors, producing accurate valuations that reflect city-specific characteristics.
  4. Regression AnalysisRegression analysis explores the relationships between variables, assessing how one variable influences another. In AVMs, regression is essential for calculating property valuations by examining various attributes, such as property size, location, and comparable sales. AA+ Appraisal & Consultancy uses regression analysis to analyze property valuation and evaluate correlations between real estate and other asset classes, underscoring real estate’s diversification role within investment portfolios. Investors benefit from regression analysis within AVMs, as it provides a deeper understanding of how property attributes impact value, creating a solid foundation for value assessments across diverse property types.

Through its commitment to continuously advancing technology, AA+ Appraisal & Consultancy is at the forefront of leveraging advanced analytical tools in AVMs to revolutionize property valuation. With VAR, VECM, PCA, and regression analysis, AA+’s AVMs provide responsive, accurate, and versatile valuations that capture both immediate and long-term influences on property values. Supported by high-quality data and thoughtful oversight, AA+ Appraisal & Consultancy’s approach not only improves valuation precision but also empowers clients with data-driven insights for strategic investments in today’s complex real estate market.

Hotel and Resort Valuation: Why Property Owners and Investors Need Expert Services

Valuing a hotel or resort property is a complex process that goes beyond simple real estate appraisal. In the Philippines, as in many parts of the world, it’s essential to distinguish between the valuation of the property itself and the business operations that drive its income. This dual approach – evaluating both real estate and business assets – is known as “business valuation.” Understanding this distinction is crucial because an accurate valuation can mean the difference between a successful acquisition or merger and a risky investment.

Understanding Hotel and Resort Properties

Hotels and resorts differ significantly in structure and operation. City hotels are often high-rise buildings that cater to business and urban travelers, while resorts tend to be located in popular tourist destinations and usually offer villas, lodges, and expansive spaces. The revenue generation capabilities of these properties also differ, as city hotels rely heavily on room bookings and catering services, while resorts may have additional revenue streams from activities, events, and outdoor experiences. For any hotel or resort valuation, it’s essential to consider vacancy rates, room rates, selling price, and income from various sources.

Our Portfolio in Hotel and Resort Valuation

At AA+ Appraisal & Consultancy, we have extensive experience appraising some of the Philippines’ most sought-after hotel and resort properties. Our portfolio includes a diverse range of locations, such as:

  • Islands Resort in Northern Samar
  • Fun Park & Resort in Dasmarinas, Cavite
  • Beachfront properties in Panglao, Bohol
  • Prime beach resorts in San Vicente and Puerto Princesa, Palawan
  • Hotel and Resort in Cordova, Cebu
  • Mountain Resort in Pinamungajan and Toledo Cebu
  • Exclusive beachfront sites in Punta Engaño and Tabogon, Cebu
  • Five-star hotels in Cebu City and other major destinations

Our team’s expertise in valuing these high-profile locations, which attract both local and international tourists, enables us to deliver accurate and reliable appraisals that reflect the true potential of each property.

Key Valuation Approaches for Hotels and Resorts

  1. Cost Approach: This method focuses on the cost of land and building improvements, plus the cost of materials and equipment used in hotel operations. This approach can provide a reliable baseline, but it may not fully capture a hotel’s revenue-generating potential, especially if the valuation excludes certain equipment or decorations.
  2. Market Approach: For properties with substantial market data, the market approach offers a more comparative valuation based on similar hotels or resorts. It’s critical, however, to have detailed information on comparable properties to perform an accurate market comparison.
  3. Income Approach: Since hotels and resorts are revenue-driven properties, their valuation often hinges on projected income and profitability. Factors like occupancy rates, average room rates, and food and beverage sales provide a clear picture of a property’s income-generating potential. Additionally, for properties managed by hotel chains, an understanding of management contracts and performance benchmarks is necessary for a comprehensive valuation.

Importance of Expert Valuation Services for Owners and Investors

Valuing a hotel or resort property is more than just a calculation – it requires a nuanced understanding of the market, operational revenue streams, and industry trends. Here’s why expert valuation services are indispensable:

  • Informed Decision-Making: A detailed and credible valuation report empowers owners and investors to make informed decisions. Whether developing a new hotel, investing in a resort, or expanding a portfolio, a well-researched valuation reveals a property’s true potential.
  • Credibility and Accuracy: Expert appraisers bring industry knowledge and experience to the table, ensuring that valuations are both credible and accurate. This is especially important for lenders and financiers who need reliable data to support refinancing or loan issuance decisions.
  • Tailored and Timely Reporting: Hotel and resort valuations often require tailored approaches due to the unique nature of each property. Professionals provide customized reports that are delivered on time, even for portfolios of various sizes and locations, allowing clients to move forward with confidence.
  • Market-Specific Insights: Changes in real estate markets, local regulations, and competitive landscapes affect hotel values. Professional appraisers stay informed about these shifts, using advanced methodologies and analysis to adjust valuations accordingly.

Required Documents for a Comprehensive Hotel Valuation

Accurate hotel valuations rely on a comprehensive set of documents, which may include:

  • Land ownership documents
  • Building permits and plans
  • Business licenses and occupancy rates
  • Financial statements of business operations over the past three years
  • Environmental Impact Assessments (for larger hotels)
  • Management contracts, where applicable

Partnering with Experienced Professionals

The valuation of hotels and resorts requires specialized knowledge and experience, as these properties are often more complex and financially dynamic than standard real estate assets. At AA+ Appraisal & Consultancy, our appraisers are experts in hotel and resort valuation, equipped with in-depth market insights and a commitment to delivering reliable, actionable results. Our services help owners, investors, and financiers achieve clarity and confidence, enabling them to pursue their projects and investments with a firm grasp of the property’s worth.

By leveraging our expertise, particularly in high-demand areas like Panglao, Palawan, and Cebu, you gain an edge in understanding the full value and potential of your hotel or resort property.

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.