I assume no responsibility for matters legal in character-, nor do I render any opinion as to the title, which is assumed to be good. All existing liens and encumbrances have been disregarded and the property is appraised as though free and clear under responsible ownership and competent management.
Further, I have made no survey of the property and assume no responsibility for its accuracy. I am not required to give testimony or attendance in court by reason of this appraisal, with reference to the property in question, unless arrangements have been previously made therefore.
I have no present or contemplated interest in the property appraised. The distribution of the total valuation in this report between land and improvements applies only under the existing program of utilization. The separate valuations for land and building must not be used in conjunction with any other appraisal and are invalid if so used.
This appraisal has been made in accordance with the Code of Ethics of the Society of Real Estate Appraisers. In this statement the appraiser states that he or she assumes no responsibilities for questions of title, that the appraisal fee is not contingent on the value reported, and that the appraiser has no present or contemplated interest in the property appraised. The statement of limiting conditions is followed by qualifications of the appraiser including past experience and education.
The qualifications of the appraiser listed in summary form and maps of the city, neighbor-hood, and market data complete the documentation. The market data map locates each comparable sale in relation to the subject property for review purposes. Thus, the appraiser not only submits an opinion of value but also documents reasons for this opinion in a manner that permits a review of the opinion.
THE MARKET COMPARISON APPROACH
The real estate industry relies heavily on the market approach. Here the main problem is to secure representative sales that indicate the prevailing market price. In searching for sales of property similar to the property appraised, the appraiser acts in much the same way as a census taker. He or she samples the opinions of many buyers and sellers who have negotiated prices in the free market.
This approach suggests that prices vary for closely comparable properties. Price variation may be explained by differences in the time of sale, location, and physical characteristics, such as the age of the building, its present condition, and its floor area. After studying a sufficient number of sales to support the market value estimate, the appraiser makes the inductive leap, reasoning from repeated observations of the market to the market value estimate an estimate that is strongly supported by empirical sales evidence. It should be noted that sales prices are not averaged. Appraisers draw their value conclusion from the most representative sales in the light of the best market evidence.
Tune in my blog next week because I will be discussing the limitations of the market comparison approach as a means of appraising property—as there are some quite poignant limitations this approach has especially when compared to other methods. This is especially apparent here in the Philippines where market comparisons of lots seems so close to each other, have very odd market prices. More to come next week.