How to Appraised Road right of way affected by NGCP at Valencia Bukidnon

 

Road right of way appraisal is very challenging , valuation report should provide credible reasoning and solutions to convince the court . One factor that gives the appraiser  a lot of headache is when the client only provides technical site description yet there is no sketch plan for the road right of way affected area.

Identify first what type of kv line that affected the property , it looks like this :

In my case , the item installed is a subtransmission line with 69 kv line , then it is very easy for us to identify the easement zone that will affect the property , for 69 kv voltage level , the standard width (m) for both sides is 15 meters. thus the length of the adjacent property is 1,000 meters or 1 km , we then multiply from the desired width of 15 meters to obtained the easement area of 15,000 sqm more or less. 

For the approaches to value , there is a scarce of sales data within the area , thats why sales comparison approach is not a reliable indicator to value. Cost approach is not also applicable , there may be an agricultural improvement but there is no improvement affected by the road right of way easement. It is best to apply income approach for the area , why? because I observed that the area is cultivated with banana typically cavendish with irrigation system. I called back the client and requested for the potential gross income per hectare of banana land and their operating expenses , the we subtract the potential gross income to the operating expense to arrive at the Net Operating Income after tax . Capitalization rate will be easily extracted from band of investments from banks , mortgage to loan ratio , in my computation , the cap rate around the area is around 12%. Thus to obtain the  market value using the formula , V = I/R , Market value = Net operating income after tax /  Capitalization rate . Appraisal solved !!!

How to Appraised Industrial Lot located at Tablon , Cagayan de Oro City

 

        As observed from the scene , the area is a rawland which means that it's not developed yet . From the technical site description of the title , the property is adjacent to a river and a street , fronting the  industrial building. The terrain of the property is plain with an area around 4  hectares approximately. After thorough occular inspection of the properties . To determine the highest and best use of the property , there are some basic questions to arrive at HABU ;

• Is the suggested use a reasonable and likely one?
• Is the use legal , or is there a reasonable likelihood that a legal entitlement for the use can be obtained?
• Is the property physically suited to the use or can it be adapted to the use?
• Is the suggested use financially feasible? and
• Of those uses that meet the first four tests , is the selected HABU the most productive use of the land?

The Highest and Best Use as Improved and as if Vacant is of Industrial use based from the following questions above. For the approaches to value , the Sales Comparison Approach and Income Approach is a reliable indicator to value. For the Comparables of Sales Approach , we will gather data that is the same nature with the subject property , we will search/inquire properties that is recently sold or listed which is an industrial lot and adjusted it to the elements of comparison to arrive at the market value. For Income Approach , we will apply ground rent capitalization using discounted cash flow , we have data for lease contract agreement up to 15 years. Discount rate for present worth factor at 6% . The value for sales comparison approach and income approach will then be reconciled to arrived at the final market value of the land.

Some considerations in valuing industrial lands is the zoning , location , optimal size , flow and volume of traffic , corner influence and public facilities and amenities.

How to Appraised Commercial Building located along the highway of Kauswagan , Cagayan de Oro

Valuation of Commercial Building is quite challenging since there is no building plan available , I have to measure from corner to corner to get the rough estimate of the area of the building , It takes around an hour and a half to inspect and measure the building area . Using AutoCAD software , I can easily plot every area of the building :

Then I plot the land area :

Always remember to take pictures from every angle of the building for later reference and for your addenda of the appraisal report. From the building information , I have an updated Construction Cost Data as of the actual year . Cost per square meter for Commercial buildings in the Philippines would range up to Php 40,000 to Php 50,000 including electrical , mechanical and plumbing services. For my replacement cost new , I apply Php 45,000 per sqm to be multiplied to the building area . For the Physical Depreciation ,, using straight line method , the effective age of the building is around 5 years since it undergone gradual renovation , the economic life of the building is set to 50 years. Functional Obsolescence and External Obsolescence is 0%. By deducting the total Replacement Cost new to the depreciation to get the Market Value of the building . For the Market Value of the Land , approaches to value is the Market data approach , I collected three comparable data that is similar to the characteristics of the land and adjusted the elements of comparison and reconcile to get the Market Value of the land. The Total  Market Value of the Land and Building is then added for our Appraised Value.

How to Appraised Commercial Land located at Butuan , Caraga for Collateral Purposes

 

The commercial lot to be appraised has existing gasoline station with two storey commercial building .To get the market value of the land by using sales comparison approach , opinion survey from bank appraiser and income approach using discounted cash flow analysis. We have to set under the assumptions and limiting conditions that the property to be appraised is for land only excluding the building . There were two contiguous lot to be appraised so we have to defined our basis of value if we value the lot  as a whole , so our basis of value would be synergistic value . Synergistic Value means an additional element of value created by the combination of two or more assets or interests where the combined value is more than the sum of the separate values. The advantage of synergistic value is that usually the market value as a whole is greater than the market value as individual for two contiguous lot , why is this? its because from the elements of comparison , the adjustments will be different and therefore superior from the comparables .The appraiser gathered comparable data for sales comparison approach and inquiry from knowledgeable appraiser exposed to that area .From Income approach using discounted cash flow analysis , we will get first the value of the building from within the property . Using discount rate say 6% , we can easily get the present worth factor for the period of 15 years as per contract lease agreement basis , then we will sum it up from the value of the land and building for reversion .We then reconcile the value of the sales comparison approach , inferential opinion survey and the income approach using discounted cash flow analysis . 

How to Appraised Agricultural Land located at Laguindingan , Misamis Oriental

When it comes to the valuation of agricultural properties , the physical and environmental aspects of the property assume special importance. The appraiser observed that the area has no irrigation or irrigated canal , the terrain is plain with slope portion at the middle part of the property . There are some coconut trees with some perennial trees growing in the area . No crops were planted in the area , it seems that the rawland is idle . The barangay road is adjacent to the area and just few meters away from the developed four lane diversion road going to Cagayan de Oro City. Upon conducting the highest and best use of the property , the property can be of residential as vacant and as improved , since Laguindingan is the next major development compared to the neighboring municipalities. For approaches to value , the appraiser apply the Income Capitalization Approach and Sales Comparison Approach . For Income Capitalization Approach , we will use the Hypothetical Development Approach since the area is suitable for subdivision , we will project for three years , the Gross Income then deducted from the development expense to arrived at Net Operating Income , with capitalization rate of 12% and discount rate of 6% . For Sales Comparison Approach , we just gather the comparables with same nature to the property and adjust for their element comparison to arrive at the market value . The final market value will then be reconciliated to Income Approach and Sales Comparison Approach .

How to Appraised Two Storey Residential Building located at Xavier Estates , Phase 4 , Cagayan de Oro

   

 

note : not to scale

Real Estate Appraisal for two storey residential building appraisal report takes around 7 to 10 days depending on the data availability . I asked the owner of the property for the photocopy of the title and tax declaration for due diligence and lot plotting of the property . For the approaches to value since there is no bill of materials , construction cost data available , I have to measure the entire area of the building using laser distance meter and have it drawn using AutoCAD Software to easily get the area by polyline command . For the computation of the Building , I will use the Cost Approach , since the building is almost new , using the Replacement Cost New less Depreciation . To arrive at the replacement cost new using cost per square meter method , I inquire the expert contractor here in Cagayan de Oro ,how much is  the range of cost to build the high end model of the building , after that we could easily get the Replacement Cost New of the building . The depreciation of the building as of 2021 since it is almost new , by using straight line method on Physical Obsolescence is just around minimal percentage . No functional obsolescence deducted since the building is not yet outdated . For external obsolescence , due to pandemic (Covid 19) , I deducted small percentage for the depreciation. After summing up the Physical , External and Functional Obsolescence , you can easily deduct from the total replacement cost new of the building to arrive at the final market value of the building . Computation for the land by using Sales Comparison Approach adjusted by element of comparison such as location , size , shape , corner lot influence and time adjustment . For the final market value of the property , just add the value of the land and building .