USC held Forum on Entrepreneurship and Management

Appraiser Planner11913087_10205251112898331_1857892936_n Gus Agosto attended the Forum with visiting professors Dr. John Leung from City University of Hongkong and Dr. Brian To from Singapore Management University as speakers. Dr. Leung discussed the topic “Entrepreneurship is Service”, while Dr. Brian To share the topic “Managing Yourself”.

Both professors were distinguished and successful on their own field. Dr. Leung is currently the Director of Executive MBA program, and an Associate Professor of Marketing at City University of Hong Kong. While Dr. Brian To is a Senior Practice Professor of Strategy and Leadership and Senior Wharton Fellow of University of Pennsylvania.

“The more I learn, the more I realize that there are more things I need to learn and discover”, Appraiser Planner Gus said. Gus is also a faculty member of the University of San Carlos.

The forum, organized by the School of Business and Economics, was held last August 24, 2015 in University of San Carlos Downtown Campus.  “The pace of innovation in business are now moving fast, and I want to learn more to provide my clients of top of the line solutions”, Gus ended.

No two properties are alike

marketvaI have a client who asked me if I am using the same appraisal report format in my practice.  I quickly replied no. Why? Real estate properties have different appraised values depending on how you intend to use the appraisal. For instance, valuation for insurance may be very different than the value in the market, estate tax, property resale, or insurance. Other assigned uses include investment, liquidation, price confirmation, equitable distribution, loan collateral, retrospective value and many more.

Qualified and educated appraisers understand the many different types of values, assigned uses, and market condition in an specific area. He or she works with client to choose the proper type of value so that they can use the appraisal correctly and effectively.

Whenever there’s a question about the value of your property, there’s also a risk involved. It may be the risk of selling too low, or of paying too much: the risk of being under or over insured; the risk of not getting your fair share in a division of property; the risk of incurring tax penalties or being audited when calculating estate taxes.

A professional appraiser helps you manage these and other such risks by providing a written opinion of value upon which you can base your financial decisions. Rather than being just an “educated guess”, the professional appraiser’s value conclusions are based upon prescribed methods of valuation, research and report writing.

Bankers, investors, insurers, brokers, trustees, lawyers, judges, government agencies – ALL are dependent upon the knowledge and expertise of the appraisers, and so are you. Too often and too late, people find out that the appraisals they have are inaccurate or misleading, resulting not only in greater risk to themselves, but also a waste of millions out of their pocket.

No two properties are alike, no two appraisals are alike.

Appraisal services with a government institution

Appraiser Gus Agosto has just rendered appraisal services to the University of the Philippines, Cebu Campus. “It is an honor to be awarded a contract and appraised properties of a prestigious institution like U.P.”, Appraiser Gus Agosto shared.

“Government institutions and agencies are good market for real estate appraisers. Appraisers can explore and participate in government bidding and contracts.” he further said.  Last year, he was also part of an appraisal team that provided appraisal services to the Cebu Appraisal Technical Committee on Zonal Valuation of the Bureau of Internal Revenue (BIR).

To succeed, Appraisers should have working knowledge of the Republic Act 9184 or the Government Procurement Act. Every branch or agency of the government through the head of a procurement entity forms a bids and awards committee (BAC) to conduct competitive and transparent purchases by means of public bidding. There are also alternative ways government can make purchases like limited source bidding, direct contracting, negotiated procurement and shopping,

“In winning a government contract, offering the lowest price is not the key. It is knowledge, appraisal experience and excellence in appraisal that matters,” Appraiser Gus ended.

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Retrospective Value Appraisal

Most appraisals are for current market value. So the very day an appraiser comes out and inspects a property, the value will be “as of today”. But there are appraisal that determines the value of a property from the past. It is called Retrospective value appraisal.

What is a Retrospective value appraisal? It is a historical determination of the market value. With a retrospective appraisal, the effective date of valuation is what the property was worth on a particular date in the past-maybe last month, last year or last 10 years ago.

What is the purpose of a historical appraisal? Many and varied reasons. Accountants and financial planners need to determine the value of property held in estate when the owner dies. This is known as a “Date of Death” appraisal. The BIR want a professional appraisal in the file to document the value as of that date. Lawyers use the historical appraisal to determine what assets belong to which party.

Historical appraisal is also needed in court litigations involving expropriation of private lands for public use, and ejectment cases. The court will appoint appraisal commissioner to determine the market value of the property on the date of taking. If the property was taken from the owner last year or five years ago, the date of the valuation will be the same.

I recently appraised a property using retrospective appraisal. The property was expropriated for a government project. To determine the market value as basis for just compensation, my client hired my services. In this case, I valued the property based on the comparables, market data and analysis at the time the expropriation took place.

If the appraisal is for court litigation, we may be called on the witness stand to testify to our report and defend it against the opposing lawyers and his witness. There are additional fees for this type of testimony. But be sure your report is defensible and ready to thwart any questions of the opposing counsel.

In this more complicated retrospective or historical appraisal, it is important to hire an appraiser with experience and familiar in the market area. An appraiser with sufficient experience has insight in this area before, during and after changes that have occurred over.

As a professional appraiser it is my responsibility to be the best and be credible as possible for my client. If you have questions on real estate appraisal, feel free to contact me.

Appraisal 101: How an appraisal is done

It has been a normal scene for prospective client and practitioners to ask an appraiser for the value of a certain property. Some people also thought that after site inspection, an appraiser can render a value opinion already. So, there is a need to answer questions on how an appraisal is done? And why it is important to follow the process?

Appraisal may seem as a simple and fast process. An appraiser shows up at a property for a short time with a camera and tape measure and that’s it. However, the property inspections are only a part of a big process. A typical appraisal report requires 12 to 13 combined hours by appraiser and staff to complete.

Ordering an Appraisal
The process usually begins when a client call or visit the appraiser to order an appraisal. In the telephone or in-person conversation, the appraiser will asks data of the property such as title, building plan, tax declaration, as well as preliminary information of the client, and agree on the scope of work and professional fee. The most important is scheduling of the site inspection.

Identifying the Property
In preparation for the site inspection, the appraiser will study the documents provided by the client focusing on the location, shape and size of the lot, design of the house and decide on what valuation approach that he will use. Additional research will be done in different government offices for the identification of the property.

The Site Visit
Then the appraiser conducts a careful physical inspection of the property and the neighborhood. Take photographs and verify area measurements. Don’t worry about the kids, toys or household disorder. The appraiser is looking at the structure, condition and features of your home.

The appraiser will also roam the neighborhood to observe, estimate the distance between known landmarks in the area. Also, to look for any factors and characteristics that may affect the value of the property, and searching for comparable properties or “comps”. In the language of appraisal, ‘comps’ are sales and listings available in the market.

Pulling It All Together
Next, the appraiser performs in depth analysis of all of the available data. Returning to office is crucial part of the appraisal process. The appraiser will gather all the information about the properties and the financial aspects. Make phone calls to agents, government offices and other parties involved in the transactions to confirm observations or to gather more information. Examine the title and tax declaration for any encumbrance, annotation and non-compliance with the law. Often, property information from several sources is in conflict and it is the appraiser’s task to determine the true state of affairs by means of research, experience and good judgment.

Guided by the principles of appraisal, he will analyze the neighborhood, market, zoning, the predominant use of the area and determine the highest and best use of the property, as vacant and as improved.

In using market data approach, the appraiser will select at least three comps, but generally four or five are necessary to support the basis for the final appraised value. The appraiser makes adjustments to reflect differences in comp properties. Upgrades like painting, chandelier, air conditioners, recent redecorating, or home improvements may add value to a property.

There are other approaches or methods in valuing properties. Every approach is made to substantiate the appraiser’s opinion of market value.

Finalization of a Report
The last part is the preparation and printing of a detailed report, outlining the value of the property appraised and the approaches to value with several addenda including copies of title and neighborhood maps as well as photographs of the property.

The completed appraisal is packaged and transmitted to the client—the property owner, lawyer or company representative who ordered the appraisal.

Thus, appraisal is not a mere “opinion of value”, it follow process and guidelines set by authorities and international standards. Following thoughtful and thorough procedures will provide a complete and credible appraisal.

Bagging an appraisal contract

A big corporation contacted me for an appraisal work. They asked for my credentials and if I’m a bank accredited appraiser. Previously, they hired a research group to do the valuation, but not satisfied with the result.

I commended their effort to look for a licensed and experienced appraiser, and gave them my credentials. I explained to them the difference between an experienced bank appraiser and non-bank appraiser.

It pays to be able to discern between the two.

What are the difference?

Non-bank appraisal is a market niche, often best suited for appraisers who think outside the box. These assignments include appraisal reports performed for situations such as pre-listing, financial reporting, divorce settlement, other litigation related cases, and government agencies appraisal needs. Intended users need to find the most qualified and experienced appraisers. Well-vetted experts are most applicable when testimony is a possibility or when looking at unique properties.

Take lawyers, for example; They need someone who can report not only well enough to be reliable but also defensible in court and a communicator. It takes a good professional to write a report, but an even better one to be effective to withstand in court trials and argumentation with fellow commissioners and lawyers. An appraiser should know how to convince the commissioners in court of his valuation, and come up with a recommendation, thereby hastening the trial process.He must also be able to communicate complex valuation theory to assessors, lawyers and judge who may have no deeper understanding of valuation processes, approaches and adjustments. In other words, the appraiser must become an effective teacher in addition to being a good report writer.

Meanwhile, many appraisers who work primarily with banks are confine within company scope of work. Banks often require appraisers to utilize comparable sales within a “price range” of an area, and not to exceed company guidelines when adjusting comparable sales and in using valuation approaches.

Clients and user of appraisal work should tread very carefully when selecting appraisers. Choosing an appraiser with limited experience could result in less than optimal results.

After the discussion with their top management, they decided to get my service. Another big corporation in my client list.

What they say on Appraiser Gus?

Let our clients and peers speak.

Gus Agosto has been perceptive enough to have realized the potential conflicts of interests with regards to meeting the sellers and has been able to navigate and maneuvered satisfactorily around it, and still come out with a justifiable figure that satisfies both parties.

Of course I would recommend him to others as he has performed what was expected of him and more.”

Richard Azares
Managing Broker
DiamondCrest Real Estate Services

“Gus Agosto is highly competent and much more knowing him in the high level of ethical standard and practice. He is knowledgeable and trustworthy in his assigned work.

We were doing the appraisal business together and yes Gus Agosto is commendable.”

Tom Academia
President
Magaca Appraisal & Konsult

“As a fellow appraiser, I can say that Gus is professional and considerate to his colleagues suggestions and opinions.
He is much updated with information and current events that could have an impact on the real estate industry especially the appraisal service.

Yes, I recommend him, because one does not only get an appraiser that can present you the technical aspect of the property but also a broker that knows the marketing conditions of a given location.”

Germaine Ouano
Managing Partner
Intech Property Appraisal, Inc.

“Gus is a new breed of appraiser that can be relied on the opinion of valuation. He is very active practicing appraiser/ someday a lecturer on the update of the Real Estate Profession and economic trend in the Philippines and ASEAN.”

Oscar Labrador
Founder
Cebu Appraisers

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.

Successful Real Estate Consultant Review

parcs cebu (2)Philippine Association of Realty Consultants and Specialist (PARCS) successfully completed its 120 Hour Comprehensive Seminar and Review for Consultants. The seminar was conducted in preparation for the upcoming Philippine Regulation Commission Real Estate Consultant Board Examination scheduled on December 3 -4, 2014.

The seminar and review gives the participants an in-depth knowledge on consultancy, due diligence, land administration, risk and rate of return, capital budgeting, market analysis and the conduct of feasibility study.

“It gave me a profound and broader view of my real estate profession”, said Gus Agosto, one of the participant. Currently, he is a practicing real estate appraiser in Cebu and other provinces in Visayas and Mindanao. “Being an economic researcher for a quite of time, the seminar refreshes my craft and add lot of knowledge plus the practical experiences shared by the participants who are seasoned real estate practitioners themselves..”

The seminar and review participants were determined to pass the board exam. The lecturer of the review include real estate icon Tom Academia, seasoned appraiser and consultant Oscar Labrador and Alexander Lumarda.