Author: AB Agosto

Just as in any other industry, the principle “prevention is better than cure” holds true in real estate investment. Engaging in real estate investment without thorough preparation can lead to significant financial setbacks and challenges. It is imperative for investors to conduct comprehensive due diligence and feasibility studies before committing their capital.

Let us discuss further of this crucial concept.

Due Diligence in Real estate investments involves substantial capital, and they often have long-term implications. Conducting due diligence means thoroughly researching and evaluating every aspect of the property or project under consideration. This process involves reviewing legal documents, inspecting the physical condition of the property, examining market trends, and assessing the financial viability. By doing this, investors can identify any potential issues or risks that might affect their investment. This preventive step allows them to make informed decisions and avoid costly surprises down the road.

Feasibility studies are a fundamental part of real estate investment. They involve a systematic analysis of various factors, including market demand, construction costs, financing options, and potential returns on investment. These studies provide valuable insights into whether a particular project is financially viable and if it aligns with the investor’s objectives. A well-conducted feasibility study can reveal whether the investment is likely to generate the expected returns or if there are hidden risks that need to be addressed.

Real estate investments come with inherent risks, such as market fluctuations, property depreciation, or unexpected expenses. Through due diligence and feasibility studies, investors can identify these risks and implement strategies to mitigate them. For example, they might consider diversifying their real estate portfolio, purchasing insurance, or setting aside contingency funds for unforeseen expenses. Proactive risk management is a form of preventive action that can safeguard the investor’s capital and long-term financial stability.

Understanding the current and future market conditions is critical in real estate. Market research allows investors to anticipate trends, assess demand for certain types of properties, and make decisions that align with market dynamics. Without this preventive measure, investors might invest in properties that become less desirable or experience a decline in value due to changing market conditions.

Real estate investments involve complex legal frameworks, including property laws, zoning regulations, and tax codes. Failing to comply with these laws can result in legal disputes, fines, or even property seizures. Investors must proactively ensure that their investments adhere to all legal requirements, which is a preventive measure against costly legal issues.

In sum, real estate investment demands a proactive approach that prioritizes prevention over cure. By conducting due diligence, feasibility studies, risk mitigation, market research, and legal compliance, investors can reduce the likelihood of encountering unexpected challenges or losses in their real estate ventures. This prudent approach not only safeguards their investments but also enhances the potential for long-term financial success in the dynamic world of real estate.

In the field of legal battles, expropriation cases stand out as a unique arena where various professionals come together to ensure justice is served. Lawyers play a pivotal role in advocating for their clients, but there’s another crucial player in this complex process – the appraiser. Their role, although less often in the spotlight, is equally significant in achieving a fair and just resolution. Recently, a lawyer raised an important question: Why do appraisers charge upfront fees when lawyers typically work on a contingent basis?

The answer lies in the very nature of the appraiser’s role and the need to maintain objectivity in the assessment of just compensation.

Independence and Unbiased Approach

Appraisers are tasked with evaluating the value of property subject to expropriation. Unlike lawyers, their role is not fiduciary in nature. This means that appraisers are expected to provide an impartial and unbiased assessment of the property’s value. Their professional integrity rests on their ability to deliver accurate valuations free from any external influence.

Avoiding Bias in Decision-Making

Imagine if appraisers were compensated on a contingent basis, meaning their fees depended on the outcome of the case. In such a scenario, their primary focus might shift from providing an objective valuation to ensuring that their client wins the case. This shift in motivation could introduce a troubling bias into their work. Instead of aiming for an accurate valuation, appraisers might be tempted to sway their assessments to align with their client’s interests.

Distinct Roles in Expropriation Cases

Expropriation cases involve a collaborative effort between lawyers and appraisers, each with a distinct role to play. Lawyers are responsible for legal advocacy and representation, fighting for their client’s rights within the boundaries of the law. Appraisers, on the other hand, provide a critical service by offering an unbiased and accurate appraisal of the property’s value. This appraisal serves as the foundation upon which the legal argument is built.

Professional Integrity

By billing clients upfront and avoiding contingent fees, appraisers uphold the integrity of their profession. Their fee structure ensures that appraisals are conducted according to professional standards rather than being influenced by the desire for a specific legal outcome. This unwavering commitment to objectivity ensures that all parties involved can trust in the fairness of the process.

In conclusion, the role of appraisers in expropriation cases is one of objectivity and professionalism. They provide an essential service by independently assessing property values without being swayed by the legal battle’s outcome. Upholding their commitment to integrity, appraisers charge upfront fees to maintain the impartiality that is so crucial in these cases. In doing so, they contribute significantly to achieving a fair and just resolution for all parties involved.

Imus City, July 18, 2023: The Society of Litigation Valuation Experts (SOLVE) marked a historic milestone as it successfully held its induction of officers and members at Imus Regional Trial Court. Attended by esteemed professionals from various regions, legal professions, and academia, the ceremony celebrated the formation of the pioneering organization and recognized the dedication and expertise of its members, signifying a significant leap forward in the field of litigation valuation in the Philippines.

Led by Gus Agosto, President of SOLVE and a respected figure in the litigation valuation community and one of the founding members, SOLVE’s induction ceremony showcased a united vision of elevating the practice of litigation appraisal. With the surge in “Build, Build, Build” projects and the ensuing rise in expropriation cases, the Supreme Court designated special courts to address these matters, with Imus Regional Trial Court playing a pivotal role in ensuring fair and just compensation.

The venue’s selection at Imus Regional Trial Court underscored SOLVE’s commitment to staying at the forefront of the appraisal profession, particularly in the context of expropriation cases. It emphasized the organization’s recognition of the significance of accurate, impartial, and defensible appraisals in protecting property rights and ensuring justice for affected parties.

During the induction, the newly appointed officers, representing various regions and professions, pledged to uphold the highest standards of excellence, ethics, and collaboration in the field of litigation appraisal. President Gus Agosto emphasized their collective responsibility to shape the future of the profession and drive positive change.

SOLVE’s membership comprised seasoned professionals and emerging experts, each contributing their passion and expertise to the organization’s mission. PRBRES Board Member Arne Tan, in a virtual message, emphasized the organization’s pioneering role in the field and highlighted the importance of shaping its future.

The successful induction ceremony concluded with a sense of excitement and anticipation for SOLVE’s future. The organization’s commitment to excellence, collaboration, and professional growth resonated throughout the venue, signifying its dedication to shaping a brighter future for litigation valuation in the Philippines.

As SOLVE embarks on its transformative journey, the appraisal community eagerly awaits the positive impact it will make in the legal landscape and the lives of those seeking fair and accurate valuations in the realm of litigation.

About SOLVE: SOLVE is the first-of-its-kind organization in the Philippines, dedicated to the expertise of litigation valuation. Comprising esteemed professionals from various regions, the organization aims to advance the field of litigation appraisal, foster camaraderie among experts, and serve as a guiding light in the complex landscape of valuation legal disputes. With a commitment to upholding the highest standards of professionalism and integrity, SOLVE seeks to make a lasting impact on the appraisal profession and promote justice in the country’s legal system.

Recently, numerous clients requested for appraisal of the damage caused by Typhoon Yolanda and a government infrastructure project. In the wake of natural disasters or government infrastructure projects, property owners often face the daunting task of determining the extent of damages and securing fair compensation. A specialized appraisal method known as the Diminution in Value Appraisal proves to be an invaluable tool in accurately assessing property losses caused by events like Typhoon Yolanda and government-driven developments. Let’s delve into the significance of the DIV Appraisal method and how it aids property owners in their quest for just compensation.

Unlike traditional market value assessments, the DIV Appraisal method hones in on the specific damages or impairments suffered by a property due to a particular event or project. Whether it’s the devastating impact of Typhoon Yolanda or the restriction of access caused by government infrastructure projects, the DIV Appraisal offers a comprehensive evaluation of the economic losses faced by property owners.

The aftermath of Typhoon Yolanda left numerous properties in ruins, necessitating a precise assessment to determine the extent of damages. In such scenarios, the DIV Appraisal method proves to be invaluable. This specialized appraisal approach focuses on assessing the specific damages or impairments suffered by a property due to a particular event or project.

The DIV Appraisal process begins by evaluating the property’s value before the event, assuming it was in perfect condition with no damages or impairments (Unimpaired Market Value). The appraiser then takes into account the economic impact of the event, considering factors such as structural damage, loss of utility, and reduced marketability (Impaired Market Value).

By subtracting the Unimpaired Market Value from the Impaired Market Value, the appraiser arrives at the Damage Value. This value represents the specific economic loss suffered by the property due to Typhoon Yolanda, providing property owners with a clear understanding of the extent of the damages.

To obtain a credible DIV Appraisal, property owners must effectively communicate the loss in both legal and appraisal terms. Providing a current survey detailing the property’s condition before and after the event or infrastructure development is vital. The survey should highlight the extent of damages and the specific rights lost, assisting the appraiser in accurately assessing the diminution in value.

The DIV Appraisal method emerges as a powerful tool for property owners in the Philippines to assess damages and determine the true value of their properties after natural disasters or government infrastructure projects. Engaging competent appraisers well-versed in local real estate laws and regulations is essential for obtaining a credible DIV Appraisal. Armed with a comprehensive understanding of their property’s true value, property owners can seek just compensation for their losses and move forward with confidence.

In a significant milestone for the field of litigation appraisal, Gus Agosto, a prominent real estate appraiser, has been elected as the first president of the Society of Litigation Valuation Experts (SOLVE). The elections took place yesterday, marking a momentous occasion for the newly formed organization dedicated to serving litigation appraisers across the country.

The announcement was made following the election of other key members of the organization’s leadership team. Atty. Henry Onia (Pangasinan) will serve as the Chairman, Arturo Lawa (General Santos City) as the Vice President, Eden Dayrit (Makati City) as the Secretary, and Roxanne Raguini (Bataan) as the Treasurer, Atty. Rhenier Mora (Cebu) as the Auditor, and Gerald Villareal (Cavite) as the PRO. Additionally, Ana Grace Briton (Lucena), Arnold Ambat Jr.(Davao), Reggie Cosalan (Baguio City), and Shim Suan (Cagayan de Oro) were elected as members of the Board of Trustees.

Gus Agosto, known for his expertise as a litigation appraiser and the President/CEO of AA+ Appraisal and Consultancy, will now take on the vital role of coordinating the national organization’s activities. With his vast experience and commitment to the profession, Agosto is poised to lead the organization in its mission to advance the field of litigation appraisal.

The Society of Litigation Valuation Experts (SOLVE) is the first professional specialty appraisal organization of its kind, comprising members from all corners of the nation. This new organization brings together a collective of dedicated professionals who are passionate about elevating the standards of litigation appraisal.

In a statement released by the newly formed organization, it was revealed that their shared vision and purpose are centered on several key objectives. These include:

1. Establishing and Promoting Professional Standards: SOLVE aims to set high professional standards in the field of litigation appraisal, ensuring that all members adhere to ethical practices and maintain the utmost integrity in their work.
2. Providing Exceptional Education and Training: The organization is committed to offering top-notch educational and training opportunities to its members, fostering continuous learning and growth within the profession.
3. Fostering Networking and Collaboration: SOLVE recognizes the power of collaboration and aims to provide a platform for litigation appraisers to connect, exchange ideas, and learn from one another.
4. Advocating for the Interests of Litigation Appraisers: The organization will actively represent and advocate for the interests of its members, seeking to create a supportive and conducive environment for their professional development.
5. Ensuring Quality Assurance: SOLVE places a strong emphasis on maintaining the highest levels of quality assurance in the industry, ensuring that clients receive superior appraisal services.

The newly elected president, Gus Agosto, expressed his enthusiasm for the organization’s mission and invited all professionals in the field of litigation appraisal to join them on this exciting journey. With a commitment to excellence and innovation, SOLVE aims to shape the future of litigation appraisal, further enhancing the expertise and professionalism of its members to better serve their clients.

As the Society of Litigation Valuation Experts (SOLVE) embarks on this transformative endeavor, it signals a new era for the profession, promising to revolutionize the landscape of litigation appraisal and deliver unparalleled value to all stakeholders involved.

According to the National Economic Development Authority, over 3,600 projects are in the pipeline and be implemented through 2028. Land acquisition and expropriation of lands are inherently part of these projects. An expropriation happens when a governmental entity (known as the Implementing Agency) acquires land without the owner’s permission. The Right of Way Act outlines this privilege. The Act specifies whether there is an expropriation public purpose, the steps that the Agency and affected owners must take, any compensation rights, and any terms and conditions that must be offered. When confronted with an impending expropriation, a property owner may find it challenging to comprehend this highly technical and sophisticated area of law.

Prior to expropriation, the expropriating agency will frequently try to negotiate a deal with a property owner. The agency, however, has the jurisdiction to seize what is necessary in accordance with the Act if they are unable to reach an agreement or the owner is unwilling to cooperate. The owner will thereafter have little control over what land is taken and when, but she or he can bargain for a reasonable compensation.

Negotiation Phase

Before the expropriation process begins, the property owner is given thirty (30) days to decide whether or not to accept the offer as payment for his property. During this period, the Agency may approach a property owner with an offer, and attempt to negotiate a voluntary purchase. If this fails, or the owner refuses to accept the offer, the next step is for the implementing agency to initiate expropriate proceedings.  

Once you receive an Offer you have two options: first, you may accept the Offer and receive full and complete payment of compensation for the expropriation; or second, you may not accept the Offer and continue to investigate the valuation further and make any additional claims for compensation in an expropriation proceeding.

The informal negotiation phase can be the landowners best opportunity to reach a settlement as easily as possible, but there might be roadblocks. Perhaps your differences regarding the compensation’s value are too great. Or perhaps there is too much ambiguity over how the expropriation will affect your property or your company for you to reach a deal before the expropriation.

In general, the negotiation can continue regardless of whether the negotiation period has expired or a court proceeding is ongoing. In any case, the law encourages amicable dispute resolution through alternative dispute resolution (ADR) methods rather than adversarial, judicial processes. The public will ultimately benefit from prompt and equitable resolution of such dispute resolution mechanisms.

Determining the just compensation is very technical and requires the appropriate expertise. The total value of compensation should be determined by the appropriate experts, such as an appraiser, who is familiar with the expropriation process. As a result, it is critical that a property owner selects an appraiser who is not only experienced but also knowledgeable about the Act, its requirements, and negotiation. Through this process, we can create an effective decision-making that is also much more inclusive. It considers all

Feasibility studies are an essential aspect of real estate development, as they help to determine the viability and profitability of a potential project before investing significant time and money. Feasibility studies are conducted to evaluate the financial, technical, legal, environmental, and market factors of a project to determine if it is practical and profitable to proceed.

The study included a market analysis to determine the demand for the different components of the project, as well as a financial analysis to determine the costs and potential returns of the project.

Based on the results of the feasibility study, the developers were able to make informed decisions about the design and construction of the project, including the size, layout, and amenities of the various components. The study also helped the developers to identify potential risks and challenges associated with the project, and to take measures to minimize or mitigate them.

AA+ Appraisal & Consultancy, a real estate consulting firm, has conducted feasibility studies for various real estate development projects in the Philippines. Two notable projects are a hotel in Ermita, Manila, and an integrated marina resort in Lapulapu City.

The first project involved evaluating potential hotel development sites and making recommendations for facilities and brand affiliations. The proposed hotel will be a component of a mixed-use development plan and will cater to the needs of local travelers and businessmen. The market study showed that the most viable project with the highest return on investment is the renovation of the existing hotel, resulting in a projected income and a return on investment of 770%. The project will help promote tourism and create employment opportunities in the area.

The second project is envisioned to be a world-class standard, with a full-service hotel property, condominium, marina clubhouse, and berth slip. The study analyzed the site, physical improvements, and amenities, as well as the outlook for the national economy, capital markets, and resort hotel visitation. The report also projected income and expenses for both the proposed hotels, and the marina component, and provided a feasibility conclusion with respect to the projected return on investment. The project is projected to generate a profit margin with the key assumption that operations will be managed by key executives and the workforce. Two ways to generate higher profit are to link up with an international hotel and obtain TIEZA accreditation.

Both projects are expected to help fill the gap in the government’s thrust to promote tourism and create employment opportunities in the area.

Highest and best use (HBU) can be used to determine compensation in expropriation cases. HBU refers to the most profitable and legally permissible use of a property that is physically possible, financially feasible, and maximally productive.

When determining compensation in expropriation cases, the HBU concept is used to establish the value of the property based on its potential future use, rather than its current use. This means that if the expropriation would prevent the property owner from realizing the highest and best use of their property, they may be entitled to compensation for the lost potential value.

In order to determine the HBU of a property, several factors are typically considered, including:

1. Zoning and land use regulations – The zoning and land use regulations in the area can impact the HBU of a property.
2. Physical characteristics of the property – The physical characteristics of the property, such as its size, shape, and topography, can affect its potential uses.
3. Market demand and trends – The demand for certain types of properties, as well as market trends in the area, can impact the HBU of a property.
4. Economic factors – Economic factors, such as interest rates, inflation, and the availability of financing, can also impact the HBU of a property.

In particular, when determining the HBU of a property for expropriation compensation, it may be necessary to consider:

1. The specific public purpose for which the property is being expropriated: The intended use of the property by the expropriating authority may impact the potential uses of the property and, therefore, its HBU.
2. The impact of the expropriation on the property’s value: The HBU analysis must take into account the impact of the expropriation on the value of the property, including any reduction in size, loss of access or visibility, or changes in zoning regulations that result from the expropriation.
3. The availability of alternative sites: The HBU analysis may also consider the availability of alternative sites for public purposes, which could impact the value of the property being expropriated.
4. The market conditions at the time of expropriation: The HBU analysis must take into account the prevailing market conditions at the time of the expropriation, including any changes in economic trends, population growth, or market demand that could impact the potential uses of the property.
5. The potential for future development or use: The HBU analysis may also consider the potential for future development or use of the property, which could impact its value.

Once the HBU of the property has been determined for expropriation compensation purposes, it can be used to estimate the market value of the property before the expropriation, which can be used as a basis for determining the compensation owed to the property owner.

Public works and taxes are frequently featured in the news, whether it be local or international. People should examine possible funding sources as well. Prof. Agosto, the University of San Carlos’s School of Business and Economics’s newest assistant professor, emphasizes the issue. “The delivery of public goods should be looked at in a sustainable way,” Agosto said.

Public finance is primarily concerned with these topics. It concerns how governments handle the public purse, including taxation and spending, and how that affects societal welfare and economic expansion. As a result, it actively participates in the economy by supplying firms and individuals with the goods and services they want.

This semester, Prof. Agosto will teach undergraduates in public finance courses. I’m looking forward to teaching,” he exclaimed. His unique teaching method encourages students to get hands-on with real data through government portals and offices, techniques, and ideas from recently published research. “Public finance, which is a branch of economics, lends itself really well to integrating theory and empirical work and answering socially relevant questions,” he says. Prof. Agosto asserts that “in many cases, we can reduce an ideologically charged question to an empirical quantity that can be measured.”

Professor Agosto is one of the consultants who review the proposed property taxation in the city of Cebu. In assessing and recommending a policy change that was ultimately adopted by the municipal council, he employed the ideas. “Public finance is quite significant right now”, he remarked. His research aims to answer fundamental concerns about the economy, such as how much money should be spent, how taxes should be set up, and, in the case of the tax cut example above, who genuinely stands to gain from it. His more recent studies have delved into public policies and housing issues.

Prof. Agosto received his Master’s in Economics from the University of San Carlos, where he specializes in housing, finance, and the role of government in the economy and public policy. He received Fellow Status from Social Watch Philippines and the People’s Public Finance Institute at the University of the Philippines in Lahug, Cebu City.

Agosto in his talk titled “ The Role of Property Taxation in Urban Planning” emphasizes the role that property taxes might play in urban development. He stated during his presentation at the first-ever face-to-face national conference of PIEP following the pandemic that “planners should employ diverse techniques in fulfilling its duty in the society.” The 2022 National Convention and General Assembly of PIEP were held in Legazpi, Albay on November 8-10,2022.

According to Agosto, “Tax measures influence the land use process in reclassification, exemption provision, subsidies, and economic development.” For instance, the provision of higher property taxes would either promote or discourage stakeholders in a specific place and will ultimately influence the use of the land.

Additionally, he discussed the necessity of cross-departmental cooperation within local government organizations in order to guarantee the achievement of the municipality’s or city’s main objective. Everyone has a responsibility to do their part to provide social services to the populace through property taxation and to guarantee that it plays a part in attaining a land use plan that is advantageous to everybody.

The Philippine Institute of Environmental Planners (PIEP) is the accredited professional organization for Environmental Planners in the Philippines. Currently, it has 18 Chapters and 4,324 members nationwide.