10 Comparative Study - Smv & Mv

COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING (CREASAT) Engr. Raul T. Punzalan

Comparative Study of Land Values : Comparative Study of Land Values : Recorded Sales at ROD, Assessor’s Recorded Sales at ROD, Assessor’s Schedule of Market Values (SMV), Schedule of Market Values (SMV),

Zonal Values of BIRZonal Values of BIRandand

Market Value (MV)Market Value (MV)


• Method of Valuation of Land – Market Data Approach

• The appraisal of land to determine acceptable estimates of market value is a complicated process in the Philippines.

• There exists no reliable database that would serve as basis for establishing the true market values of land.

• Further compounded by the existence of several schedules of land values prepared by different government agencies and private entities that reflect varying values for similarly located and comparable properties.

INTRODUCTION


INTRODUCTION

• Records of sales of land filed with Registry of Deeds (ROD) are mostly, if not all, are undervalued.• sellers and buyers avoid paying the correct taxes

pertinent to the transfer of ownership over a parcel of land.

• Schedules of Market Values (SMV) established by Assessors for assessing real estate taxes are very low compared to prevailing market values. • mass appraisal• data – preceding 3 years• subject to approval by local boards and are mostly

influenced for political reasons.

• The Zonal Values prepared by the Bureau of Internal Revenue (BIR), which serve as basis for assessing national taxes, are mostly lower than the prevailing market values.

Available Government Records


METRO MANILA In terms of Ave. Values In terms of No. of DataComparison of Data Average Higher Lower %age %age

Adjective Variance Higher LowerMarket Value (MV) compared to: a. ROD RS Higher 322% 34 0 100% 0% b. ASSESSOR’S SMV Higher 997% 34 0 100% 0% c. BIR ZV Higher 62% 33 1 97% 3%

COMPARATIVE STUDY – Market Value vs. Government Records

CABANATUAN CITY In terms of Ave. Values In terms of No. of DataComparison of Data Average Higher Lower %age %age

Adjective Variance Higher LowerMarket Value (MV) compared to: a. ROD RS Higher 233% 8 0 100% 0% b. ASSESOR’S SMV Higher 1958% 8 0 100% 0% c. BIR ZV Higher 572% 8 0 100% 0%

URDANETA CITY In terms of Ave. Values In terms of No. of DataComparison of Data Average Higher Lower %age %age

Adjective Variance Higher Lower

Market Value (MV) compared to: a. ROD RS Higher 824% 8 0 100% 0% b. ASSESSOR’S SMV Higher 4337% 8 0 100% 0% c. BIR ZV Higher 285% 8 0 100% 0%


BATANGAS CITY In terms of Ave. Values In terms of No. of DataComparison of Data Average Higher Lower %age %age


Market (MV) compared to: a. ROD RS Higher 634% 10 1 91% 9% b. ASSESSOR’S SMV Higher 1777% 11 0 100% 0% c. BIR ZV Higher 930% 11 0 100% 0%

PROVINCE OF BULACAN In terms of Ave. Values In terms of No. of Data

Comparison of Data Average Higher Lower %age %age


Market Value (AV) compared to: a. ROD RS Higher 337% 8 0 100% 0% b. ASSESSOR’S SMV Higher 994% 8 0 100% 0% c. BIR ZV Higher 423% 8 0 100% 0%



BICOL REGION In terms of Ave. Values In terms of No. of DataComparison of Data Average Higher Lower %age %age


PROVINCE OF CAVITE In terms of Ave. Values In terms of No. of DataComparison of Data Average Higher Lower %age %age





BACOLOD CITY In terms of Ave. Values In terms of No. of DataComparison of Data Average Higher Lower %age %age


1. Market Value(MV) compared to: a. ROD RS Higher 75% 13 0 100% 0% b. ASSESSOR’S SMV Higher 342% 13 0 100% 0% c. BIR ZV Higher 5% 12 1 92% 8%

OTHER LUZON AREAS In terms of Ave. Values In terms of No. of DataComparison of Data Average Higher Lower %age %age




CEBU CITY In terms of Ave. Values In terms of No. of DataComparison of Data Average Higher Lower %age %age



DUMAGUETE CITY In terms of Ave. Values In terms of No. of DataComparison of Data Average Higher Lower %age %age

Adjective Variance Higher LowerMarket Value (MV) compared to: a. ROD RS Higher 262% 9 0 100% 0% b. ASSESSOR’SSMV Higher 970% 9 0 100% 0% c. BIR ZV Higher 200% 9 0 100% 0%



TAGBILARAN CITY In terms of Ave. Values In terms of No. of DataComparison of Data Average Higher Lower %age %age


MANDAUE CITY In terms of Ave. Values In terms of No. of DataComparison of Data Average Higher Lower %age %age




PROVINCE OF CEBU In terms of Ave. Values In terms of No. of Data

Comparison of Data Average Higher Lower %age %age Adjective Variance Higher LowerMarket Value (MV) compared to: a. ROD RS Higher 55% 12 0 100% 0% b. ASSESSOR’S SMV Higher 1881% 12 0 100% 0% c. BIR ZV Higher 250% 12 0 100% 0%

CATARMAN CITY In terms of Ave. Values In terms of No. of DataComparison of Data Average Higher Lower %age %age




BUTUAN CITY In terms of Ave. Values In terms of No. of DataComparison of Data Average Higher Lower %age %age


DAVAO CITY In terms of Ave. Values In terms of No. of DataComparison of Data Average Higher Lower %age %age

Adjective Variance Higher LowerMarket Value (AV) compared to: a. ROD RS Higher 1127% 11 0 100% 0% b. ASSESSOR’S SMV Higher 1012% 11 0 100% 0% c. BIR ZV Higher 625% 11 0 100% 0%



ZAMBOANGA CITY In terms of Ave. Values In terms of No. of DataComparison of Data Average Higher Lower %age %age


GEN. SANTOS CITY In terms of Ave. Values In terms of No. of DataComparison of Data Average Higher Lower %age %age

Adjective Variance Higher LowerMarket Value (AV) compared to: a. ROD RS Higher 315% 12 0 100% 0% b. ASSESSOR’S SMV Higher 667% 12 0 100% 0% c. BIR ZV Higher 52% 12 0 100% 0%



1. The MARKET VALUE is always higher than RECORDED SALES at ROD, and varies in the different areas surveyed, from a minimum of 55% to a maximum of 1,127%.

2. The MARKET VALUE is always higher than the ASSESSOR’S SCHEDULE OF MARKET VALUE, and varies in the different areas surveyed, from a minimum of 187% to a maximum of 7,474%.

3. The MARKET VALUE is always higher than the BIR’s ZONAL VALUE, and varies in the different areas surveyed, from a minimum of 5% to a maximum of 930%.

RESULTS OF SURVEY – Market Value vs. Government Records


Continuous decline of LGU Compliance to the Local Government Code Requirement to Conduct General Revision of SMV once every 3 years


Types of data used by private appraisers as basis for land valuation:

• Offers to SellThis type of data is available through real estate brokers,

classified ads, magazines, newspapers and from other real estate practitioners. Since these are offers, the value usually reflected in this type of data are considered as the seller’s price and may not necessarily reflect market value. Normally, the prices are still subject to negotiations. Therefore, the values reflected on the offers are not so conclusive.

• SalesThese data are usually available through real estate

brokers/practitioners who act as agents of sales transactions. While this type of data could be reliable if the source of the information is credible, oftentimes, it is not verifiable. Normally, brokers or sources would not allow appraisers to use their names in appraisal reports, hence the data becomes a hearsay.

RESULTS OF SURVEY – Market Data Used


•Inquiries with Bank AppraisersThese data are based on appraisals conducted by bank

appraisers and mostly given, upon request, as ranges of value for a particularly land in a certain location. It is up to the appraiser of the land to make the necessary adjustments. Most appraisers consider this type of data as reliable, since bank appraisers are based on the locality where the land appraised is located, and most banks have appraisers all over the country.

•Inquiries with Independent AppraisersThis type of data is based on appraisals conducted by

independent appraisers. The data is considered reliable if the presence of the independent appraiser is well-established in the locality where the appraisal is conducted.



•Inquiries with Assessors Data gathered are deemed reliable provided the source knows

the difference between the actual market value and market value per the LGU schedule. There are instances when staff of the Assessor’s Office cannot differentiate the two values.

•Inquiries with Registry of DeedsData gathered are deemed reliable provided the source knows

the difference between the actual market value and market value per the LGU schedule. There are instances when staff at the office cannot differentiate the two values. Another, factor is that the Registry of Deeds are only based on key cities and municipalities, which may require travel from the area where the appraisal is conducted.



Table 1a. No. of Data Used in the Appraisals

Type of Data No. %age

1 Offers to Sell 163 8.72%2 Inquiries with Bank Appraisers 1,321 70.64%3 Inquiries with Independent Appraisers 284 15.19%4 (Undocumented) Sales 37 1.98%5 Inquiries with Assessor 50 2.67%6 Inquiries with Registry of Deeds 15 0.80%7 Recorded Sale at ROD 0 0%8 LGU Market Value 0 0%9 BIR Zonal Value 0 0%

Total No. of Data 1,870 100%Average No. of Data per Appraisal 5.52



Table 1b. No. of Appraisals in which the Types of Data were Used

Type of Data No. of Appraisals %age

1 Offers to Sell 111 32.74%2 Inquiries with Bank Appraisers 339 100.00%3 Inquiries with Independent Appraisers 163 48.08%4 (Undocumented) Sales 37 10.91%5 Inquiries with Assessor 39 11.50%6 Inquiries with Registry of Deeds 15 4.42%7 Recorded Sale at ROD 0 0%8 LGU Market Value 0 0%9 BIR Zonal Value 0 0%



LAMP2

LEGISLATIVE ADVOCACY


OBJECTIVE: To establish a consistent real property valuation system based on internationally

accepted valuation standards, concepts, principles & practices.

POWERS & FUNCTIONS:• National Valuation Authority (NVA) will be created as the primary agency

on matters concerning valuation of real property• Will provide leadership & policy direction to LGUs, NGAs, private sector

institutions & individuals dealing with valuation…including the development & maintenance of valuation standards, the regulation of valuation activities and other related matters…valuation education and continuing professional development.

• Expected impact – A harmonized valuation processes among government agencies, & private sector; Consistency in land valuation by eliminating wide disparities of values; Improved public & investor confidence that will stimulate the land market.

PROPOSED VALUATION REFORM ACT (VRA) – 2011?


NVA Advisory Board

Public Sector (LGUs & NGAs)& Private

Sector Valuation

Proposed VRA Structurefor both Public & Private Sectors


THANK YOU.

10 Comparative Study - Smv & Mv

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