The beginning of a new year is always a good time to invest in real estate. As another year commences, many property owners are looking to acquire or dispose of real property. In the Philippines, one of the biggest obstacles for investors is determining the correct market value of their properties.
Why Should Vacant Lots be Appraised?
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.
But vacant land appraisals are different from appraisals of built property such as houses and commercial buildings. A vacant lot appraisal is primarily centered on the goal of finding the highest and best use of the property, excluding other factors that may contribute to its value such as zoning laws, average daily traffic count (ADT), costs of construction.
Land Valuation Standards in the Philippines
To ensure consistency, objectivity, and transparency, there are certain standards when it comes to land valuation in the Philippines. Moreover, professional appraisers in the country also follow International Valuation Standards (IVS) published by the International Valuation Standards Council (IVSC).
Factors to Consider in Land Valuation
This includes the lot’s size, shape, topography, frontage, climate, availability of water, sewage lines, etc. Valuations also consider physical factors as these may have a direct effect on construction costs and development costs in the long run.
Accessibility to Economic Activities
Land valuations also factor in the location and its accessibility to economic activities. Lots that offer easier accessibility and are located near city centers and highly developed and commercialized areas are valued higher compared to remote and more secluded ones.
The cost of land is also affected by the availability and distance from essential facilities such as medical facilities and hospitals, shopping malls and districts, schools, parks, grocery stores, etc.
Present and Future Land Use
The value of a lot is also determined by the uses permitted on its premises. Commercial and residential types differ in value because of their purpose, as the return on investment over a period of time is also considered. Appraisals also consider anticipated developments surrounding the lot.
Land and Property Records
Having verifiable records and documentation of past purchases and buyers of a lot may also be a factor in determining the value of a lot. This is an important aspect when it comes to processing ownership, deed transfers, and other legal matters in the future.
Development Controls and Building By-laws
Zoning codes, legal issues, and management regulations should also be considered when determining the value of a vacant lot. As construction takes place, various laws such as land use, land tax, premise level use, floor area ratio, and other development controls will be applied to the property, which will affect its market value.
Need assistance in determining the value of your property? Know how KMC’s Valuation and Appraisals Team can help you! Reach out to Rose Ann Gabriel at (+63) 917-800-5453. You may also contact us by calling (+63) 2-8403-5519 or sending an email to [email protected].