2016 Introduction To Property Appraisal by CQA

Introduction to Property
Appraisal
By:
CAROLINA Q. ALVAREZ
BS CHEMISTRY
PRC R.E. CONSULTANT Reg. No. 011
PRC R.E. APPRAISER Reg. No. 015
PRC R.E. BROKER Reg. No. 016
AGENDA
Introduction to Property Appraisal
Purposes of Appraisal
Why is there a need for a professional property

appraiser
What is a professional real property appraiser
Opportunities for real property appraiser

DEFINITION OF APPRAISAL
Appraisal or valuation is the process

of developing an estimate of the value
of an adequately identified and
described property as of a specific date,
supported by logical presentation of
factual and relevant data primarily
based on a personal inspection of the
property.
DEFINITION OF APPRAISAL
Appraisal/Valuation includes all of the
research, data, reasoning, analysis and
conclusions necessary to arrive at a value
estimate.
Appraisal does not create value but

observes and interprets forces which
create value.
In real property valuation, the need for

appraisals arises from the heterogenous
nature of real property: no two real
properties are identical, and all real
PURPOSES OF APPRAISAL
-Transactions involving transfers of
property ownership:
To help prospective buyers set offering prices
To help prospective sellers determine
acceptable selling price
To establish a basis for real property exchange
To establish a basis for reorganizing or
merging the ownership of multiple properties
To determine the terms of the sale price for a
proposed transaction
PURPOSES OF APPRAISAL
- Property considered as collateral to
secure loans and mortgages :
To estimate the value of the security
offered for a proposed mortgage loan
To provide an investor with a sound basis for
deciding whether to purchase real estate
mortgages, bonds, or other types of securities
To establish a basis for a decision to insure
or underwrite a loan on real property
PURPOSE OF APPRAISAL
Property subject to litigation or pending
settlement of taxes :
Eminent domain proceedings

estimate market value of the property as a
whole
estimate market value remainder after the
taking
estimate the damage to a property created
by the taking
Property divisions :
estimate market value of a property in contract
disputes
estimate market value of a partnership interest
Environment litigation :
estimate damages created by environmental
violations
estimate damages created by environmental
damages
Tax matters :
estimate assessed value based on market value for
local property taxation
estimate zonal value ( market value) for BIR taxation
to separate assets into depreciable (or capital
recapture) items such as buildings and non-depreciable
items such as land, and to estimate applicable
depreciation (or capital recapture) rates
to estimate the value of the real estate component of
an estate plan which represents the foundation for
future capital gains and inheritance taxes
determine gift or inheritance taxes
Investment consulting and decision making :
to set rent schedules and lease provisions
to determine the feasibility of a construction or
renovation program
to facilitate corporate mergers, the issuances of
stock, or the revision of book value
to determine supply and demand trends in a
market
to advise zoning boards, courts, and planners,
among others on the probable effects to proposed
actions
Why is there a need for a
professional real property appraiser?
Real property is distinguished from most goods

and services because of the relatively longer
period required to market what is a relatively
illiquid commodity in order to achieve a price
that represents its value.
The characteristically longer exposure time,

the absence of a spot market (a market in
which commodities are available for
immediate sale), and the nature and diversity
of properties and property markets give rise to
the need for Professional Appraisers.
Why is there a need for a
professional real property appraiser?
There exists no centralized setting for the

trading of property assets, as there exists for
trade in corporate stock. The absence of a
market-based pricing mechanism determines
the need for an expert appraisal/valuation of
real estate/property.
Real property is different from most
goods and services in the market
Longer exposure time
Relatively illiquid commodity
Diversity for which real property valuation is
required Nature of real properties and real
property situations Diversity of real property
markets
Complexity of real property valuation
procedures
What is a professional real
property appraiser?
Valuations performed should be provided

by HONEST and COMPETENT Valuers or
Appraisers. (Philippine Valuation Standards,
1st Edition)
He/She is a person who possesses the

necessary qualifications, ability, and
experience to estimate property value.
(Philippine Valuation Standards, 1st Edition)
property appraiser?
He/She is a person who possesses intimate
knowledge of a property market;
understands the interaction of participants in
the market; and is, thereby, able to judge
the most likely prices to be concluded
between buyers and sellers of property in
that market.
He/She is skilled and capable to offer

estimation on the worth of a real property.
property appraiser?
He/She has a wide understanding of the
market and performs a methodical analysis
in order to generate a correct appraisal of a
propertys value.
He/She may also possess the specific

expertise to perform valuations of other
categories of property, i.e., personal
property, businesses, and financial interests.
In Real Estate Transactions, an
appraisal may be desired to:
help set the sellers asking price;
help a buyer determine the fairness of the asking price;
set a value for real property when it is part of an estate;
estimate the relative values of properties being traded;
set value on property involved in corporate mergers,
acquisition, liquidations or bankruptcies;
determine the amount of a mortgage loan; or set rental
rates
determining building insurance value;
determining the effect on value of construction defects
as part of a legal proceeding;
In Real Estate Transactions, an
appraisal may be desired to:
assessing property for taxes;
setting gift or inheritance taxes;
estimating remodeling costs;
valuing property as part of a marital dissolution;
determining development costs;
discovering a vacant propertys most profitable
use;
ascertaining whether the present use of a
property is its most profitable use; and
establishing a value for property in a
condemnation proceeding.
Opportunities
for
Professional Real
Property
Appraiser
Employment Opportunities
Contractor Property Appraisal Service

Provider
Appraisal Service Companies
Bank and Other Financial Institutions
Real Estate Companies
Insurance Companies
Government Offices
Thank you!

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Introduction to Property

Introduction to Property Appraisal

Why is there a need for a professional property

What is a professional real property appraiser

Opportunities for real property appraiser

Appraisal or valuation is the process

Appraisal does not create value but

In real property valuation, the need for

Eminent domain proceedings

Real property is distinguished from most goods

The characteristically longer exposure time,

There exists no centralized setting for the

Valuations performed should be provided

He/She is a person who possesses the

He/She is skilled and capable to offer

He/She may also possess the specific

Contractor Property Appraisal Service

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