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How To Estimate The Value of Real Estate Properties in The Philippines
How To Estimate The Value of Real Estate Properties in The Philippines
How To Estimate The Value of Real Estate Properties in The Philippines
Knowing how to appraise the value of real estate properties is very important on the
part of the Real Estate Broker to be able to recommend the best property at a given
budget as well to the buyers themselves so they can make the right investment
decision. The skill in determining values of properties help the real estate
brokers/agents determine saleable properties and organize their arsenal of selling
prowess to prioritize on these saleable properties. As important would be the buyers
who should also get to know the real value of what they have bought.
In cost approach, the value of a property can be estimated by summing the land value
and the depreciated value of improvements. The land value is usually based on the
prevailing market value in the area distinct from the zonal value set by the
government. For house and lot properties, it is best to separate the land from the
building/improvement and add them up together after knowing its individual values. For
example, if you want to know the value of a house and lot in a subdivision in Mactan, a
3 bedroom house, 5 years old, with a floor area of 80 square meters and a lot area of
120 square meters. First, you will have to estimate the prevailing selling price of middle
end subdivision in the area. Assuming the average is P6,000 per square meter, the
value of the land would be 120 X 6,000 = P720,000.00 Then, estimate the value of the
house. The acceptable prices ranges are as follows:
Low Cost housing : P16,000.00 to P25,000 per square meter
Middle End housing: P26,000.00 to P35,000 per square meter
High End housing: P36,000.00 to P45,000 per square meter
The basis of the above figures is the average price offerings of major real estate
developers in Cebu
So, for the lot area of 80 square meters X P30,500.00 average price per square meter =
P2,440,000.00
Then add the value of the lot = P720,000 = P3,160,000.00 excluding VAT which is 12%
Since the example above states that the property is already 5 years old, depreciation
value shall then be deducted as follows:
Depreciation = P3,160,000 / 50 years = P63,200.00 cost of depreciation per year.
Depreciation cost for 5 years = P63,200.00 X 5 = P316,000.00
Therefore the appraised value of the property in this example shall be P3,160,00.00
less P316,000.00 depreciation = P2,884,000.00