10 Comparative Study - SMV & MV

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

Comparative Study of Land Values :
Recorded Sales at ROD, Assessors
Schedule of Market Values (SMV),
Zonal Values of BIR
and
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 Data
Comparison of Data Average Higher Lower %age %age
Adjective Variance Higher Lower
Market Value (MV) compared to:
a. ROD RS Higher 322% 34 0 100% 0%
b. ASSESSORS 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 Data
a. ROD RS Higher 233% 8 0 100% 0%
b. ASSESORS 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 Data
Adjective

Variance
Higher Lower
a. ROD RS Higher 824% 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 Data

Adjective
Variance Higher Lower
Market (MV) compared to:
a. ROD RS Higher 634% 10 1 91% 9%
c. BIR ZV Higher 930% 11 0 100% 0%
PROVINCE OF BULACAN
In terms of Ave.
Values
In terms of No. of Data

Adjective
Market Value (AV) compared to:
a. ROD RS Higher 337% 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 Data
a. ROD RS Higher 334% 10 0 100% 0%
c. BIR ZV Higher 439% 10 0 100% 0%
PROVINCE OF CAVITE In terms of Ave. Values In terms of No. of Data
Adjective

Variance
Higher Lower
a. ROD RS Higher 114% 16 0 100% 0%
c. BIR ZV Higher 192% 16 0 100% 0%
BACOLOD CITY In terms of Ave. Values In terms of No. of Data
Adjective

Variance
Higher Lower
1. Market Value(MV) compared to:
a. ROD RS Higher 75% 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 Data
a. ROD RS Higher 248% 20 0 100% 0%
c. BIR ZV Higher 345% 20 0 100% 0%
CEBU CITY In terms of Ave. Values In terms of No. of Data

Adjective
a. ROD RS Higher 149% 13 0 100% 0%
c. BIR ZV Higher 146% 13 0 100% 0%
DUMAGUETE CITY In terms of Ave. Values In terms of No. of Data
a. ROD RS Higher 262% 9 0 100% 0%
b. ASSESSORSSMV 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 Data
a. ROD RS Higher 540% 11 0 100% 0%
c. BIR ZV Higher 674% 11 0 100% 0%
MANDAUE CITY In terms of Ave. Values In terms of No. of Data
a. ROD RS Higher 101% 10 0 100% 0%
c. BIR ZV Higher 111% 10 0 100% 0%
PROVINCE OF CEBU
In terms of Ave.
Values
In terms of No. of Data
a. ROD RS Higher 55% 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 Data
a. ROD RS Higher 247% 8 0 100% 0%
c. BIR ZV Higher 236% 8 0 100% 0%
BUTUAN CITY In terms of Ave. Values In terms of No. of Data
a. ROD RS Higher 512% 10 0 100% 0%
c. BIR ZV Higher 203% 10 0 100% 0%
DAVAO CITY In terms of Ave. Values In terms of No. of Data
a. ROD RS Higher 1127% 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 Data
a. ROD RS Higher 331% 10 0 100% 0%
c. BIR ZV Higher 556% 10 0 100% 0%
GEN. SANTOS CITY In terms of Ave. Values In terms of No. of Data
a. ROD RS Higher 315% 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
ASSESSORS 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
BIRs 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 Sell
This 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 sellers 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.

Sales
These 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 Appraisers
These 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 Appraisers
This 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 Assessors Office cannot differentiate the two values.

Inquiries with Registry of Deeds
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 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 valuationincluding the
development & maintenance of valuation standards, the regulation of
valuation activities and other related mattersvaluation 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?
DOF
NVA
Advisory
Board
Public Sector
(LGUs & NGAs)
& Private
Sector
Valuation
Proposed VRA Structure
for both Public & Private Sectors

THANK YOU.

10 Comparative Study - SMV & MV

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COMPREHENSIVE REAL ESTATE PROPERTY APPRAISAL SEMINAR AND TRAINING (CREASAT)

Engr. Raul T. Punzalan

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