The commissioner’s report, prepared by the assistant city assessor, plays a crucial role in the appraisal of properties situated in Mabolo, Cebu City. This report typically includes a detailed assessment and valuation of the properties based on various factors mandated by local regulations and valuation standards.
The highlight of her report is the presentation of findings and recommendations. Based on the data provided, the commissioner has recommended an appraisal value of Php88,667.00 per square meter for the subject properties, along with the valuation of structures/improvements based on tax declarations.
In the context of real estate appraisal, the commissioner’s report outlines the assessed value of each property, considering factors such as location, size, zoning regulations, accessibility, amenities, and current market conditions. The assistant city assessor, in preparing this report, adheres to established valuation methods and standards to ensure fairness and accuracy in determining property values.
Alignment with Valuation Standards
As defined by the Philippine Valuation Standards (PVS) 30.1 IVS Defined Basis of Value – Market Value, the estimated amount for which an asset should be exchanged between a willing buyer and a willing seller in an arm’s length transaction is key. However, the methods used in the report do not fully align with PVS IVS 105 Valuation and Approaches Method, which recognizes market, cost, and income approaches as standard valuation methods. The provided data—Schedule of Market Value at 10,500.00, Zonal Valuation at 75,500.00, and Sales Data at 180,000.00—represent different valuation sources, but are primarily used for tax and administrative purposes. While efficient for these roles, they may not accurately reflect individual property characteristics or current market conditions as individual property valuation does.
In real estate appraisal, adherence to established valuation standards is crucial to ensure the accuracy, fairness, and reliability of property valuations. The Philippine Valuation Standards (PVS), aligned with International Valuation Standards (IVS), provide a framework for valuers to conduct consistent and credible assessments. According to PVS 30.1 IVS Defined Basis of Value – Market Value, the estimated amount for which an asset should exchange in an arm’s length transaction between knowledgeable and willing parties, under no compulsion to act, forms the basis for property valuation.
The commissioner’s report presents various valuation figures for properties in Mabolo, Cebu City, including the Schedule of Market Value at 10,500.00, Zonal Valuation at 75,500.00, and Sales Data at 180,000.00. These figures are typically derived from mass appraisal methods used for tax and administrative purposes. While these methods provide efficient ways to assess large numbers of properties, they may not capture the nuanced characteristics or current market conditions of individual properties.
The report’s reliance on mass appraisal methods, such as zonal valuation and schedule of market value, may diverge from the detailed and individualized approach advocated by PVS IVS 105 Valuation and Approaches Method. This standard emphasizes the use of market, cost, and income approaches to reflect the unique attributes and potential of each property accurately. The market approach considers recent sales data of comparable properties, the cost approach evaluates the cost to replace or reproduce the property, and the income approach estimates the property’s value based on its income-generating potential.
Individual property valuation ensures a more precise assessment by considering specific factors such as location, size, condition, and market demand. It provides stakeholders with a clearer understanding of a property’s true market value, essential for decision-making in real estate transactions, financing, and investment.
To enhance the accuracy and relevance of property valuations in Mabolo, Cebu City, it is recommended to incorporate more detailed analysis using recognized valuation methods. This includes a deeper examination of comparable sales data, consideration of property-specific attributes, and application of the appropriate valuation approach under PVS IVS guidelines. By aligning with these standards, valuers can provide stakeholders with reliable and insightful valuations that support informed decision-making and ensure fairness in property assessments.
Erroneous Use of Different Bases of Value in the Commissioner’s Report
In the context of real estate valuation, adherence to established standards is paramount to ensure accuracy, consistency, and fairness in property assessments. The Philippine Valuation Standards (PVS), aligned with International Valuation Standards (IVS), provide a framework for valuers to conduct comprehensive and credible valuations based on recognized methods and principles.
Bases of Value Defined:
- Schedule of Market Value: This refers to predetermined values set by local governments for properties within specific categories or zones. These values are often used for taxation and administrative purposes, aiming to provide a uniform assessment across a broad area without considering individual property characteristics or current market conditions.
- Zonal Value: Similar to the schedule of market value, zonal value assigns standardized values to properties within designated zones. It is typically established by regulatory bodies like the Bureau of Internal Revenue (BIR) in the Philippines to facilitate property taxation and administrative assessments.
- Sales Data: This includes actual transaction prices of comparable properties recently sold in the market. The sales data approach relies on real-world transactions to estimate the market value of a subject property, considering factors such as location, size, condition, and amenities.
Alignment with Philippine Valuation Standards
The Philippine Valuation Standards, particularly PVS 105 Valuation and Approaches Method, emphasize the use of recognized valuation approaches—market approach, cost approach, and income approach—to determine a property’s value. These approaches consider the unique characteristics of each property and current market dynamics, ensuring a thorough and accurate valuation process.
Location Dynamics
The subject properties in Mabolo, Cebu City, benefit from a prime location near Cebu IT Park and Cebu Business Park, contrasting with the sales data located in Bauhinia Drive, Kasambagan, Cebu City. The disparities in location and market valuation underscore the importance of selecting appropriate valuation methods and comparable data.
Location significantly influences property values and market dynamics. Properties in Mabolo command higher values due to proximity to major business districts and upscale amenities, whereas areas like Kasambagan may differ in neighborhood ambiance and infrastructure development. These variations necessitate nuanced valuation methods—market, cost, and income approaches—to accurately reflect the unique attributes and market conditions of each property location.
Location is a pivotal factor in real estate valuation as it significantly influences property values and market dynamics. The subject properties in Mabolo, Cebu City, and the sales data provided in Bauhinia Drive, Kasambagan, Cebu City, illustrate contrasting examples that highlight the importance of selecting appropriate valuation methods and comparable data.
Mabolo is recognized as a prime area within Cebu City, characterized by its strategic location near major business districts such as Cebu IT Park and Cebu Business Park. This proximity offers residents and businesses convenient access to upscale amenities, commercial establishments, and employment opportunities. Such favorable attributes contribute to higher property values in Mabolo due to increased demand and limited availability of prime real estate.
Key Factors Influencing Property Values in Mabolo
Proximity to Business Districts. The close proximity to Cebu IT Park and Cebu Business Park enhances the desirability of properties in Mabolo, attracting corporate offices, technology firms, and affluent residents seeking convenience and connectivity.
Upscale Amenities and Infrastructure. Mabolo offers a range of upscale amenities including shopping malls, restaurants, educational institutions, and healthcare facilities. The presence of well-developed infrastructure supports a high quality of life, further enhancing property values.
Market Demand and Investment Potential. The robust demand for properties in Mabolo, driven by both residential and commercial interests, contributes to competitive pricing and appreciation in property values over time. Investors often view Mabolo as a lucrative area for real estate investment due to its growth potential and favorable market conditions.
In contrast, Kasambagan in Cebu City offers a different neighborhood ambiance and infrastructure development compared to Mabolo. While centrally located within the city, Kasambagan may not benefit from the same proximity to major business hubs or upscale amenities as Mabolo. This variation can influence property values and market dynamics in Kasambagan, resulting in different pricing trends and investment opportunities.
For valuers assessing properties in Mabolo and Kasambagan, understanding these location-specific nuances is essential. It involves analyzing local market trends, neighborhood characteristics, accessibility to amenities, and potential for future development. Valuation methods such as the market approach, cost approach, and income approach must be applied with consideration to these factors to ensure accurate and insightful property valuations.
When selecting comparable sales data for valuation purposes, valuers must prioritize data points that closely match the location and characteristics of the subject properties. This approach minimizes biases and inaccuracies that may arise from using data from dissimilar locations or market segments, ensuring that the valuation reflects the true market value of each property.
Weighting in Valuation
Weighting in real estate valuation refers to the process of analyzing and reconciling different indications of value obtained from various valuation methods, not the basis of value. Unlike averaging, which simply calculates the arithmetic mean of values without considering the qualitative differences between them, weighting assigns importance or “weight” to each valuation method based on its relevance and reliability in the specific appraisal context. This approach ensures a balanced and credible valuation outcome that accurately reflects the property’s worth in the current market context, essential for informed decision-making in real estate transactions.
Unlike averaging, which may obscure important qualitative differences between valuation results, weighting provides a nuanced approach that acknowledges the unique characteristics and complexities of each property. By integrating multiple valuation perspectives through weighting, valuers can mitigate biases and uncertainties inherent in any single valuation method, thereby enhancing the reliability and accuracy of the valuation outcome.
In the commissioner’s report, the commissioner uses the different basis of value such as schedule of market value, zonal value and sales data which is erroneous and do not align with the Philippine Valuation Standards.
Real estate valuation typically involves the use of multiple approaches, each providing a different perspective on the property’s value:
Market approach relies on recent sales of comparable properties (comparables) to estimate the market value of the subject property. It considers factors such as location, size, condition, topography, view accessibility and amenities.
The cost approach estimates the value of the property based on the cost to replace or reproduce it, considering current construction costs and depreciation.
Income approach estimates the value of income-producing properties based on their ability to generate rental income or revenue. It is commonly used for commercial properties and rental apartments.
Given that each valuation method may yield a different value for the same property, weighting allows valuers to reconcile these differences and arrive at a comprehensive and credible valuation conclusion. The process involves:
Assessing Methodological Strengths and Limitations
Valuers evaluate the strengths and weaknesses of each valuation method in relation to the specific property being appraised. For instance, the market approach may be preferred when there is sufficient comparable sales data available, whereas the cost approach might be more applicable for newer properties or those lacking comparable sales.
Factors such as property uniqueness, market conditions, and the purpose of the valuation influence the choice and weighting of valuation methods. For example, if a property is located in a niche market with limited comparable sales, the income approach may carry more weight in determining its value.
Valuers exercise professional judgment in assigning weights to valuation methods, taking into account their experience, knowledge of the local market, and adherence to valuation standards. This ensures that the final valuation reflects a balanced and justified assessment of the property’s worth.
Hence, the commissioner’s report on the appraisal of properties in Mabolo, Cebu City, is a critical document that shapes property assessments and decisions in real estate transactions. However, the report’s reliance on bases of value like schedule of market value, zonal value, and sales data raises concerns regarding its alignment with Philippine Valuation Standards (PVS).
Aligning with Philippine Valuation Standards promotes transparency and reliability in property assessments, supporting informed decision-making for property owners, investors, and government entities alike. By adhering to recognized methods and principles, stakeholders can trust that property valuations accurately reflect market values, thereby fostering confidence in the real estate market.
21 June, 2024.
EnP. AUGUSTO B. AGOSTO, REB, REA, REC
Member, Court Commissioner
PRC License No. 0004084/Valid Until 05-23-2025
PTR No. 235760, until 12/31/2025/Cebu Province
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