What Appraisers Do

What is an Appraisal?

An appraisal is a professional appraiser's opinion of value. The preparation of an appraisal involves research into appropriate market areas; the assembly and analysis of information pertinent to a property; and the knowledge, experience, and professional judgment of the appraiser.

Appraisals may be required for any type of property, including single-family homes, apartment buildings and condominiums, office buildings, shopping centers, industrial sites, and farms. The reasons for performing a real property appraisal are just as varied. They are usually required whenever real property is sold, mortgaged, taxed, insured, or developed. For example, appraisals are prepared for:

• Mortgage lending purposes
• Tax assessments and appeals of assessments
• Negotiation between buyers and sellers
• Government acquisition of private property for public use
• Business mergers or dissolutions
• Lease negotiations

What is the Role of the Appraiser?

The role of the appraiser is to provide objective, impartial, and unbiased opinions about the value of real property—providing assistance to those who own, manage, sell, invest in, and/or lend money on the security of real estate. Appraisers assemble a series of facts, statistics, and other information regarding specific properties, analyze this data, and develop opinions of value. Each appraisal assignment challenges the appraiser's ability to put analytical skills into practice, exercise sound judgment, and communicate effectively.

 Who are the Appraisers?

The Republic Act 9646, sec. 3 (a) defines that “Appraiser, also known as Valuer, refers to a person who conducts valuation/appraisal; specifically , one who possesses the necessary qualifications, license,  ability, and experience to execute or direct the valuation/appraisal of real property.”

Also, in Section 3 of the Real Estate Service Act Law (RESA Law), it states that “The act of rendering an opinion of value is the person who shall be licensed under the Professional Regulation Commission and the Professional Board of Real Estate Service.”

As further defined on sec. 3 (g) Real Estate Practitioners shall refer to and consist of the following:
Real Estate Consultant- a duly registered and licensed natural person who, for a professional fee, compensation or other valuable consideration, offers or renders professional advice and judgment on (i) the acquisition, enhancement, preservation, utilization or disposition of lands or improvements thereon; and (ii) the conception, planning, management and development of real estate projects.

Real Estate Appraiser- a duly registered and licensed NATURAL PERSON who, for a Professional fee compensation or other valuable consideration, performs or renders, or offers to perform services in estimating and arriving at an opinion of or acts as an expert on real estate values, such services of which shall be finally rendered by the preparation of the report in acceptable written form.

What are the several types of definitions of value sought?

There are several types of definitions of value sought by a real estate appraisal. Some of the most common are:

• Market value – In International Valuation Standards (IVS) definition, it is the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer  a willing seller in an arm’s length transaction, after proper marketing  where the parties had each acted knowledgeably, prudently  without compulsion.

• Value-in-use is the net present value (NPV)of a cash flow that an asset generates for a specific owner under a specific use.

• Investment value – in IVS definition, it is the value of an asset to the owner or a prospective owner for individual investment or operational objectives.

• Insurable value - is the value of real property covered by an insurance policy.

• Liquidation value - may be analyzed as either a forced liquidation or an orderly liquidation is a commonly sought standard of value in bankruptcy proceedings.