VALUATIONS IN THE PHILIPPINES: FACTORS TO CONSIDER WHEN COMPUTING THE VALUE OF YOUR PROPERTY

Valuations and appraisals are some of the most important steps in acquiring or disposing of a real estate property. Accurate real estate valuations aid in helping property owners and investors make better and more strategic decisions when it comes to buying and selling real properties. Since a real estate investment is typically not a short-term trade, there are many factors to consider and approaches to follow in ensuring profit and maximizing the return of investments in the long run.

Determining the value of a real estate property is necessary for various reasons such as financing, sales listing, investment analysis, property insurance, and taxation. Valuations and appraisals of a property are also instrumental when estimating and deciding on the market price of land, building, or any large-scale real estate property.

A property’s market value is determined by real estate appraisals conducted by authorized and licensed real estate professionals. It is significantly affected by many factors as well as different considerations of certain economic and social trends, government regulations, and even environmental conditions. Here are some of the factors that may contribute to the estimation of the value of your property:

• Demand - Demand will always be one of the most influential factors in any real estate property. This is the need or desire for ownership supported by financial means.

• Utility – The utility aspect of a property is the ability to satisfy the future owners’ needs and goals for the property in the short or long term.

• Scarcity – While demand is the need for ownership, scarcity refers to the finite supply of competing and equivalent properties that can satisfy the utility.

• Transferability – This means the ease of the process of which the ownership rights of the property get transferred.

Market Value

Valuations and appraisals determine a property’s market value. Market value is an opinion or estimate regarding the value of a particular property as of a specific date. Generating reports are essential in businesses, government agencies, individuals, investors, and mortgage companies when making decisions regarding real estate transactions.

Value versus Cost & Price

Property value is not necessarily equal to cost or price. The cost refers to the actual expenses that the owner spent on materials, labor, etc. Price on the other hand is the amount that a client or customer pays. While both can be considered in determining the value of a property, cost and price are not the only considerations during valuations and appraisal.

Real Estate Factors

Aside from cost and price valuations and appraisals also take into consideration the following when estimating the value of real estate properties:

• Property Size

• Age and Condition

• Location and nearby facilities

• Amenities

• Planning and Zoning restrictions

Why Valuations are Essential

Unlike other goods, real estate properties and its gains are realized over a long period of time. An accurate real estate valuation is crucial for businessmen, property owners, mortgage lenders, investors, insurers, and buyers to make strategic decisions on how they can sell or buy properties and have the best return of investment.

Valuations and appraisals should be performed and conducted by licensed real estate professionals. The process involves an accurate and methodical collection of data that would be necessary for the estimation of a property’s market value.

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