- Ziggurat Realestatecorp
- 4 days ago
- 5 min read
A practical, step-by-step guide for homeowners, buyers, and sellers
Knowing your property’s True Market Value (TMV) — the price a willing buyer would pay a willing seller in an open market — is essential whether you’re selling, refinancing, settling taxes, or planning investment decisions. In the Philippines TMV often differs from government figures (like BIR zonal values or LGU assessed values), so this guide shows you how to estimate TMV properly, when to rely on official numbers, and when to hire a licensed appraiser.
Quick definitions
True Market Value (TMV) / Fair Market Value (FMV): The price the market would actually pay today for the property.
BIR Zonal Value: A government baseline used mostly for tax calculations (transfer taxes, documentary stamp tax, etc.). It’s published by the Bureau of Internal Revenue (BIR) and is not always equal to TMV. (Bureau of Internal Revenue)
LGU Assessed Value: Used for local property tax (real property tax). Different agencies can use different bases and methodologies.
Appraised Value: The valuation produced by a licensed appraiser — they attempt to estimate TMV using accepted appraisal methods and professional judgment.
Why TMV usually ≠ the BIR zonal value or assessed value
BIR zonal values are administrative baselines set per zone/street and are used for tax computation; they can lag behind current market conditions or intentionally be conservative for tax policy reasons. In 2020s–2025 there have been policy moves to modernize and standardize valuation across agencies, but zonal values still function mainly as a tax baseline — not a guaranteed market price. If you’re transacting, always compare BIR zonal value to market evidence. (Bureau of Internal Revenue)
The three (main) appraisal approaches — how professionals estimate TMV
Licensed appraisers use one or a combination of these approaches, then reconcile them into a final opinion of value.
Sales Comparison (Market) Approach
Compare recent, similar sales (comps) in the area. Adjust for differences in size, frontage, lot shape, improvements, and date of sale.
This is the most commonly used approach for residential land and houses. (Land Value Philippines)
Cost Approach
Estimate the replacement cost of buildings/improvements minus physical/functional depreciation, plus land value. Useful for new or unique properties.
Income (Capitalization) Approach / DCF
For income-producing properties (rentals, commercial lots), value is derived from expected rental income capitalized into value or from discounted cash flows (DCF) for multi-year projections.
Philippine valuation practice follows national standards that align with international valuation principles (Philippine Valuation Standards / PVS). Recent reforms and statutes (including laws passed in 2024–2025) aim to unify valuation standards and improve transparency. (Bureau of Local Government Finance)
A step-by-step DIY method to estimate your property’s TMV
Use this when you want a grounded market estimate before: listing, negotiating, or paying taxes.
Step 1 — Gather the facts
Collect documents and data:
TCT / OCT, tax declaration, floor plans, photos, title encumbrances, property tax receipts, recent repairs/improvements, lot/building area (sqm), exact address, and any siting or legal limitations.
Step 2 — Check the government baselines
Look up the BIR zonal value for your barangay/street (BIR website). This gives you a quick baseline for tax-related values but not a definitive market price. (Bureau of Internal Revenue)
Step 3 — Find comparable sales (the heart of the market approach)
Sources:
Local brokers, recently closed listings, public Registry of Deeds records (if accessible), major property portals, or ask a local licensed broker/appraiser for recent sales. Note sale dates — newer comps are more relevant.
Step 4 — Normalize comparables and compute a base market price
Choose 3–6 good comps (same neighborhood, similar lot size/use).
Record their sale price per square meter (₱/sqm).
Adjust each comp for differences: lot size, frontage, road access, improvements, condition, and sale date (market drift).
Compute a weighted or simple average to get a per-sqm baseline, then multiply by your lot/building area.
Example (digit-by-digit calculation):
Comparable sale prices per sqm: ₱5,000; ₱5,500; ₱4,800.
Step A — Add them: 5,000 + 5,500 + 4,800 = 15,300.
Step B — Divide by 3 (number of comps): 15,300 ÷ 3 = 5,100 (average ₱/sqm).
Step C — If your lot = 200 sqm → 5,100 × 200 = 1,020,000 (base market value).
Step D — Adjust for location premium of +10%: 1,020,000 × 0.10 = 102,000; 1,020,000 + 102,000 = ₱1,122,000 (adjusted estimate).
(The example shows the simple sales-comparison arithmetic; in practice you’ll apply more granular adjustments.)
Step 5 — Cross-check with other approaches
If the property generates income, do a quick income-capitalization test.
For a house with significant improvements, the cost approach will indicate whether the sales-comparison figure is reasonable.
Step 6 — Reconcile and pick a value range
Appraisers typically present a value range and a most-likely figure. For DIY, pick a conservative midpoint and prepare a “sell” and “hold” price depending on urgency and objectives.
Documents and questions to ask (checklist for a professional appraisal or broker talk)
Title type & number (TCT/OCT), tax declarations.
Encumbrances, mortgages, pending litigations.
Exact lot/building area and plans.
Recent comparable sales (with dates).
Permits and occupancy certificates (if applicable).
Zoning restrictions and DPWH/utility easements.
Flood map / geotechnical concerns.
Licensed appraisers must be PRC-registered; their reports should follow PVS and include methodologies, comps, photos, and assumptions. If you hire one, ask for their PRC license and a sample report. (Professional Regulation Commission)
BIR zonal values, LGU assessed values, and taxes — what to watch
Transfer taxes and documentary taxes often use the higher of declared sale price or BIR zonal value as a base for tax calculations. Don’t be surprised when tax computations use zonal values rather than the actual sale price. Always compare your negotiated sale price with BIR zonal value to estimate taxes. (Bureau of Internal Revenue)
Recent policy discussions and reforms (since 2024) are pushing toward more frequent updates of standardized market values and better data systems — this may change how discrepancies are handled over time. (PwC)
When you must hire a licensed appraiser
Large transactions (multi-millions), estate settlement, expropriation, bank collateral for major loans, or when legal disputes arise. A professional appraisal is the official record that banks, courts, and tax authorities will accept.
Tips to increase accuracy and to negotiate better
Use recent, local comps (same street or immediate neighborhood).
Document unique positives (corner lot, good road access) and negatives (flooding, easements).
Be transparent with buyers: show comps and appraisal summaries. Sellers who can show an appraiser’s report often sell faster and at better prices.
If zonal value is above your estimated TMV, negotiate with evidence (recent comps) or request a formal revaluation with the LGU/BIR only if you have strong proof.
Common valuation pitfalls to avoid
Relying only on property portals without confirming closed sale prices.
Using outdated comps (market conditions change quickly).
Confusing BIR zonal or LGU assessed values with TMV. (They’re related but not the same.)
Useful official & professional resources
BIR — Zonal values and guidance. (Use BIR’s zonal lookup as a tax baseline.) (Bureau of Internal Revenue)
Philippine Valuation Standards / BLGF manuals — for professional valuation standards. (Bureau of Local Government Finance)
Articles & industry commentary on valuation reform and modernization (explains trends to watch). (PwC)
Professional Regulation Commission (PRC) / Board of Real Estate Service — for licensed appraiser lists and exam rules. (Professional Regulation Commission)
Final checklist before you list or accept an offer
✓ Gather title, tax declaration, receipts, plans.
✓ Check BIR zonal value and LGU assessed value.
✓ Pull 3–6 recent comparable closed sales (same area).
✓ Run the sales-comparison math and do a sanity-check with income/cost approaches if relevant.
✓ If transaction value is high or contested, get a PRC-licensed appraiser’s report.
True Market Value in the Philippines is a market-driven figure — best estimated by the sales-comparison approach and cross-checked with cost and income methods. Government figures (BIR zonal values, LGU assessments) are necessary reference points for taxes and permits, but they don’t always reflect what buyers actually pay in today’s market. Use good comps, document everything, and for high-value or legally sensitive transactions, hire a licensed appraiser.
Source: Ziggurat Real Estate