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.

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.

Experience in Appraisal Matters

In real estate appraisal practice, there are challenges that an appraiser should strive to overcome and characteristics needed to acquire.

Valuing properties requires good judgment. An appraiser can use different methods in valuation, outlined in the international valuation standards. There are different approaches like market data, cost or income approach in valuation. He can also use other approaches like subdivision development approach, residual approach and many more.

But in choosing an appropriate valuation methodology is another thing. The appraiser considers not only the purpose of the appraisal laid out by its client, but the most important, the property’s highest and best use. This judgment emanates from the appraiser’s experience.

Good judgment is also required in analyzing comparables or “comps”. The appraiser identifies the “terms” of the sale – was it an arm’s length transaction in which both parties were equally motivated? Was it a relocation transaction where an owner was attempting to shorten the time on the market to find a buyer? Regardless, no one can tell the appraiser on what comparables to use. It is based on the appraiser’s judgment.

In whatever situation, an experienced appraiser has an edge. He always strive to look for other appraisal methodology and will cull more data on comparables with the sole purpose of rendering an opinion that will truly represents the true market value of the property.

Thus in real estate appraisal practice, experience and good judgment truly matters.

Life of a Real Estate Appraiser

What an appraiser does day to day ?

Real estate appraiser or valuer is someone who estimates the value of the land and the buildings. Most commonly, appraisers perform work for banks and companies, although many appraisers engage in a wide range of assignments, including for example, for sale, litigation, right of ways, divorce, valuation for financial reporting, estate planning and more. The appraisal work can vary greatly and can often be more complex than typical valuation assignments.

When carrying out appraisal work, appraisers’ main role is to provide an objective and unbiased opinion about the value of a property for their clients, who typically are owners, investors or lenders. Appraisers do this by gathering a series of facts,site inspections, interviews, statistics and other information, then analyzing the data to develop an opinion of value.

So what does an average day in the life of a typical appraiser normally look like?

Individuals who enjoy analytical thinking and problem solving generally have the makings of good appraisers, since each valuation assignment challenges the appraiser to put his/her analytical skills into practice, exercise good judgment and communicate effectively.

Although appraisers are typically based in an office, they spend a good deal of time at site visits. Most work full-time, during standard business hours, but appraisers often have the flexibility to customize their work schedules.

Depending on assignment, the appraisal site and specific tasks will vary. A licensed and certified appraiser is qualified to appraise all types of properties including lot, house and lot, condominiums, duplexes and apartments. An experienced appraiser is usually doing appraisal of all properties, but generally focuses on property used commercially, such as office buildings, stores and hotels.

Often times, an appraiser will conduct a fair amount of research up front before beginning work onsite, such as verifying legal descriptions of real estate properties in the assessors office or other public records.

Appraisal On-site

While onsite, an appraiser will inspect both new and existing properties, noting unique characteristics of the property or surrounding area, such as the property’s condition, structure, interior, amenities and upgrades. The appraiser also will photograph the interior and exterior of the property to use when preparing the appraisal report.

An appraiser usually uses the three approaches to value- sales approach, cost and income approach. Using the sales approach, the appraiser examines comparable sales after the site visit, to help determine value. The appraiser will also consider location and condition of the property, neighboring properties, documents, records, previous appraisals, the view from the property and income potential.

Depending on the assignment, an appraiser may also use the income approach or cost approach to develop an opinion of value. Cost approach seeks to determine how much a property would cost to replace (meaning, rebuild) after subtracting accrued depreciation. While income approach is a method of arriving at the appraisal value of a property on the basis of its opportunity cost.

Analyzing all of the data gathered, the appraiser prepares the written report showing the opinion of value.

Real estate appraisal is an interesting, rewarding, and challenging profession.

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.

Appraisal add credibility to listing price

Pricing a listing is one of the hardest— and perhaps most important — tasks in real estate. Sellers can get it wrong in either direction: If the asking price is too low, the sellers might end up leaving money on the table; if it’s too high, they won’t tap into the right target group, will lose a lot of time and may then end up selling for even less.

Can you rely on a “mata-mata” or guessing? The answer is “NO”. You cannot. Relying on a guess or the word of a non-certified person is inaccurate and will not estimate the true market value of a property. However, with the educated and experienced real estate appraiser, who apply the methodology of appraisal and employ the ethical guidelines for determining values, can be relied on as unbiased and independent. Appraisal will add credibility to your pricing.

In addition, appraisal analysis the market to determine the highest and best use of the property, thereby come up with a value that is credible and reliable.

Buyers, particularly foreign investor and businessmen, tend to buy property with confidence if it was appraised by a third party.

In our real estate profession where trust is the most important aspect, a real estate professional-broker and agents, should encourage in acquiring the services of a licensed appraiser. It is more beneficial to the clients having it appraised and help in fostering our relationship with them. In the long run, the confidence of the public on real estate practitioners.

Add credibility to your listing price, get the services of a real estate appraiser.