Prepared by:

RAMON R. ALBEUS, IE.MM.ICCV,ALAF,REA

City Assessor, LGU-Naga City

APPRAISAL is the act or process of

determining the value of a property as of a
specific date for a specific purpose. (Sec 199
(e), LGC)
It may also defined as the act of estimating the value of
a property. It is an estimate or opinion of value , usually
market value or value as defined by the appraiser. It is
made as of a specific date and is conclusion which
results from a logical and orderly analysis of facts.

 The act or process of determining the value of a

property as of a specific date for a specific
purpose (Sec. 199(e), RA 7160)
The process of estimating value (PVS)
It is an estimate or opinion of value, usually
market value or value as defined by the
appraiser. (MAG)

 it

is a supportable or defensible estimate of value

as of a particular point in time.

An

estimate expressed as a single peso amount,

of the scarcity and utility , i.e, economic nature, of
a specific property at a specified time and place,
assuming a specific use.

 Real

Estate Appraiser a duly registered and

licensed natural person who, for a professional
fee, compensation or other valuable consideration,
performs or renders, or offers to perform services
in estimating and arriving at an opinion of or acts
as an expert on real estate values, such services
of which shall be finally rendered by the
preparation of the report in acceptable written
form.

- one who conducts appraisals; specifically,

one who possesses the necessary
qualifications, ability and experience to
execute or direct the appraisal of real or
personal property;

 1.

Oral Report

2.

Letter Report

Narrative Report

4.Form

Report

1. Sale or Purchase
2. Mortgage Loans / Lending
3. Insurance
4. Tax Assessment
5. Eminent Domain (Condemnation)
6. Property Disputes
7. Inheritance/ Partitioning of Estate
8. Options- right to renew/ to buy
9. Corporate Realty- mergers, etc.
10. Urban Renewal
11. Foreclosure
12, Other uses

is the act or process of determining the

value of a property or proportion thereof
subject to tax, including the discovery,
listing, classification and appraisal of
properties.

The appraisal of real property

shall be based on the latest
schedule of Fair Market Value
(SFMV) prepared by the
provincial, city, or municipal
assessors with MMA, as
embodied in an ordinance
passed by the Sanggunian
concerned. (Sec. 212, LGC)

MV = UBMV X AREA

AMV = MV AF

Where:

MV
UBMV
AMV
AF

= Market Value
= Unit Base Market Value
= Adjusted Market Value
= Adjustment Factor

Narrow Definition:

The act or process of determining the value of

property, or proportion thereof subject to tax.

Broad Definition:

It includes the discovery, listing, classification,

and appraisal of properties. (sec. 199 (f) LGC)

Refers to the purpose for which the property

is principally or predominantly utilized by the
person in possession thereof. (Sec. 199 (b),
LGC)

For Real Property Tax (RPT) purposes, Actual use

should not be construed as a limiting factor in the basis
for the classification and valuation of the property, but as
a determining factor in establishing the assessment level
in order to set the taxable value

Where:

AV or TV = AMV X AL

AV or TV = Assessed Value or Taxable Value

AMV = Adjusted (Fair) Market Value

AL = Assessment Level (to be applied

based on actual use)

As a general rule, the classification, appraisal, and

assessment of real property for taxation purposes, shall
be governed by the provisions of R.A. 7160 and its
implementing rules and regulations and other existing
laws and rules issued by the Department of Finance thru
the Bureau of Local Government Finance (DOF-BLGF)
and the Sangguniang concerned.

For purposes of computing the internal revenue

tax, the value of the property shall be either the
zonal value, the value shown in the SFMV, or the
amount of consideration appearing in the Deed of
Absolute Sale, whichever is higher. (Sec 6E,NIRC
of 1997)

 The general standards for valuation of real property

for tax purposes is the market value. Zonal Value is a
value set by the government for internal revenue tax
purposes derived from a deversified valuation
procedures adopted by the committees or
recommending body. The zonal values takes effect
after approval by the Secretary of Finance. These
zonal values remain in force until the subsequent
revision/ amendment.

 There are four (4) types of taxes that can be collected

from the transfer, exchange or disposition of real
properties.

1. CGT- Capital Gains Tax

2. ET - Estate Tax
3. DT - Donors Tax
4. DST- Documentary Stamp Tax

 The

estimated amount for which a property should

exchange on the date of valuation between a
willing buyer and a willing seller in an arms-length
transaction after proper marketing wherein the
parties had each acted knowledgeably, prudently
and without compulsion.

 Refers to a price expressed in

terms of money (normally in local
currency), payable for the property
in an arms length market
transaction.
It is the best price reasonably
obtainable by the seller and the
most advantageous price
reasonably obtainable by the buyer.

 Refers to the fact that the value of a

property is an estimated amount
rather than a predetermined
amount or actual sale price.
It is the price at which the market
expects a transaction that needs all
other elements of the Market Value
definition to be completed on the
date of valuation.

 Requires that the estimated

Market Value is time-specific as
of a given date.
Markets and market conditions
may change, the estimated value
may be incorrect or inappropriate
at another time.

 Refers to one who is motivated,

but not compelled to buy.
This buyer is neither over-eager
nor determined to buy at any
price.

 Is

neither an over-eager nor a

forced seller, prepared to sell at
any price, nor one prepared to
hold out for a price not
considered reasonable in the
current market.

 Means

that the property would

be exposed to the market in the
most appropriate manner to
effect its disposal at the best
price reasonably obtainable.

 Presumes

that both the willing buyer

and the willing seller are reasonably
informed about the nature and
characteristics of the property, its
actual and potential uses, and the
state of the market as of the date of
valuation.

 establishes

that each party is

motivated to undertake the
transaction, but neither is forced or
unduly coerced to complete it.

1. Market value is not determined, it is estimated.

2. Market value is affected by the actions of the
buyers and sellers involved in the transactions.
3. Valuers and appraisers do not create value, they
effectively uncover the value that is already in
the property.
4. Value is estimated thru the application of valuation
methods and procedures.

VALUATION
APPROACHES
TECHNIQUES
AND METHODS

THREE VALUATION APPROACHES:

1. Sales Comparison / Market Data

2

Cost Approach

3.

Income Capitalization Approach

In ALL valuation cases, the

ultimate values established rely
on:
Proper collection of Data
Sound Analysis
Intelligent application of the
resulting analyzed information

Considers the sales of similar or substitute properties and related

market data, and establishes a value estimate by processes
involving comparison.
Listings and offerings may also be considered as data.
Assumes that an informed buyer would pay no more for a property than the cost
of acquiring an existing property of similar nature. (Principle of Substitution)

Recognizes that property prices are determined by the market

Market Value can be calculated from studying market prices for properties that
compete with one another for market share

Method is applicable when there is an active market with sufficient number of

verifiable transactions

Considers the possibility that, as an alternative

to the purchase of a particular property, one
could acquire a modern equivalent asset that
would provide equal utility.
Estimates the cost of acquiring an equivalent
land and the cost of constructing an equivalent
new structure while adjusting for depreciation to
reflect obsolescence.
Assumes that an informed purchaser would pay
no more for a property than the cost of land
improvements required in reproducing a
substitute property with the same utility as the
subject property.

 Establishes the upper limit of what the market would

normally pay for a given property when it is new.
For an older property, some allowance for various
forms of accrued depreciation is deducted to estimate
a price that approximates market value such as:
Physical Deterioration
Functional or Technical Obsolescence
Economic or External Obsolescence

REPRODUCTION COST NEW:

Cost to create a virtual replica of the existing
structure, employing the same design and
similar building materials.
REPLACEMENT COST NEW:
Current cost of constructing a similar property
using modern materials, standards, design, etc.
REPLACEMENT COST NEW LESS
DEPRECIATION:
Equivalent to the term Depreciated Replacement
Cost. This is the effect of the depreciation of a
building or other improvement, from all sources.

Considers income and expense data

relating to the property being valued
and then estimates value through
capitalization process.

Applicable to income-producing
properties.

Assumes that an informed purchaser would pay no more

for a property than the cost of obtaining an Income
Stream of the same size embodying the same risk as
that of the subject property.
Determines an income stream (annual net rent) on
potential income stream or cash flow.
The approach expresses a fixed relationship between
two factors of net income and capital value.
The approach is most applicable in the case of
investment or commercial properties

I. Sales Comparison Approach

a. Sales Comparison Method
b. Extraction/Residual Method
c. Stripping Method

II. Cost Approach:

a. Civil Engineering or Quantitative Method
b. Unit-In-Place Method
c. Indexing Method
d. Comparative/Repricing Method

III. Income Capitalization Approach:

a. Net Rent/Rental Method
b. Hypothetical Development Method
c. Discounted Cash Flow Method

THANK YOU VERY MUCH .

GOOD LUCK ..