One day, I was asked to observe in a meeting of real estate practitioners. They were finalizing the asking price of a property that has just listed. One of them opined that they can base it to the Bureau of Internal Revenue (BIR) Zonal Value, while the other one, succumbed to the pricing that is based on the prevailing prices of properties in the area. I almost bolted from my seat to immediately correct the practitioners.
I have appraised hundreds of properties already, and comparing prices of properties in the area is erroneous. It won’t give justice to the property of the client. Site valuation is not just as simple as comparing with other sold or offered for sale properties in the area. For one, no two vacant lots are the same typically; no two houses are the same. Every property is unique. There are differences in size, location, width and depth of lot, and leveling or topography of the land. The most important to consider is the lot size. Smaller lots tend to sell for a higher price per square meter than larger lots. However, if the end use is commercial, bigger lots command a much higher price. Once the sales price per square meter is determined for each comparable or “comps”, the reconciliation process begins. Then there are other factors that should be consider such as easement, road right of way, encroachment, presence of informal settlers or other occupants, the neighborhood, and also, the facilities and amenities in the vicinity.
In the larger scale, one has to consider also the real estate market, from the city or municipality up to the provincial level. All of these should be taken into account.
Meanwhile, the method of obtaining a market value from the Assessor’s Office is not reliable. We all knew that a lot owner usually declared their property at low level to minimize taxation. The zonal value also cannot be use nor relied on. Zonal values were based on streets or zones and not on individual property. Just remember that these two were all for taxation purpose only.
In conclusion, real estate practitioners should not shillyshally in topping the services of an appraiser. An experienced appraiser can guide practitioners in arriving at a reliable price of their listings. They have the knowledge and skills in discerning the value of a property. Your client deserve the best service from you.