GOOD TO KNOW
Notes on Land Valuation
The market data valuation method is based on the “Principle of Substitution” which states that a prudent man will not buy a given property that will cost him more to acquire an existing substitute property of equal desirability, utility and purpose.
- A positive adjustment (+) is made if the subject lot is superior as compared with comparables. If otherwise, a negative adjustment (-).
- Historical data is inferior to current data.
- Generally, a rectangular shape is superior to any other shape.
- Generally, a small area is superior to a big area.
- Flat terrain is superior to any other type of terrain.
- Main road is superior to the secondary road.
- To consider comparables, adjustment on each factor must not be more than 20%.
- A comparable sale is superior to a comparable listing, hence a discount from 0-20%.
- The market value must be within the range of the compute values, otherwise, the comparative becomes moot and academic.
Notes on Building Valuation
In valuing the building, Reproduction Cost New will be employed. In this approach, current cost of building materials were used, as reproducing a new one using the same materials and having the same quality as the old one and depreciating its value based on the observed useful life of the building.
RODEL G. REVILLA, REB, REA, LPT
President and Lead Appraiser