STANDARDS AND

ETHICS FOR REAL

ESTATE
APPRAISERS
Engr. Merlito Castor Catolico
Real Estate Consultant
PRC License No. 062
PRC Accredited Lecturer 071
All Types of Appraisal / Feasibility
Studies / Business Plans / Market Study
Contact : 0917 716 5538
Email: mcc3856nagili@yahoo.com
mervilan1@gmail.com

APPRAISAL
STANDARDS

STANDARDS
What are STANDARDS?
Recognized principles & concepts in valuation
Best practices in valuation services &
reporting
Accepted definitions

STANDARDS
Two Appraisal Standards Common in the Philippines
1. Philippine Valuation Standards: Adoption of
the IVSC Valuation Standards Under Philippine
Setting (PVS)
IPREA
All Government Assessors/appraisers
Private Appraisers

2. Uniform Standard Professional Appraisal

Practice (USPAP)

PARA

Private Appraisers

STANDARDS
PHILIPINE VALUATION STANDARDS
OFFICIAL NAME:
Philippine Valuation Standards : Adoption Of The IVSC
Valuation Standards Under Philippine Setting 1st Edition, 2009
Adopted by the Department of Finance Under DAO 37-09

Shall be implemented by all local government assessors, and

other DOF agencies undertaking property valuations (DAO 37-09
Section 2)

Component
Parts
COMPONENT
of the
PVS
PARTS
OF
THE PVS
1)
2)
3)
4)

Concept Fundamentals to GAVP

Code of Conduct
Property Types
Standards
Market Value Basis of Valuation
Bases other than market value
Valuation Reporting

COMPONENT
PARTS OF THE PVS
5) Applications
Valuation for Financial Reporting
Valuation for Secured Lending Purposes
Valuation for Public Sector Assets for
Financial Reporting

COMPONENT
PARTS OF THE PVS
6) Guidance Notes
Real Property Valuation
Valuation for Lease Interests
Valuation for Plant,
Machinery, and Equipment
Valuation for Intangible
Assets
Valuation for Personal
Property
Business Valuation
Consideration of Hazardous

COMPONENT
PARTS OF THE PVS
Discounted Cash Flow (DCF) Analysis for
Market Valuations and Investment Analyses
Valuation of Agricultural Properties
Reviewing Valuations
Valuation of Trade Related Property
Mass Appraisal for Property Taxation
Valuation of Extractive Industries
The Valuation of Historic Property
7) GLOSSARY

COMPONENT
PARTS OF THE PVS
In the PVS (IVS) , the three principal elements
have equal weight: Standards,
Applications, and Guidance Notes.
The IVS is popular in Europe, and the British
Commonwealth.
It was officially adopted for use in the
Philippines since 2009

USPAP

1. Component

Parts of the USPAP

1)USPAP PRACTICE

Preamble
Definitions
Ethics Rule
Record Keeping Rule
Competency Rule
Scope of Work Rule
Jurisdictional Exception Rule

UNIFORM
STANDARD
PROFESSIONAL
APPRAISAL
PRACTICE (USPAP)

2)STANDARDS AND STANDARDS RULES

Real Property Appraisal, Development

Real Property Appraisal, Reporting
Appraisal Review, Development And Reporting
Real Property Appraisal Consulting, Development
Real Property Appraisal Consulting, Reporting
Mass Appraisal, Development And Reporting
Personal Property Appraisal, Development
Personal Property Appraisal, Reporting
Business Appraisal, Development
Business Appraisal, Reporting

UNIFORM STANDARD
PROFESSIONAL APPRAISAL
PRACTICE (USPAP)
3) STATEMENTS ON APPRAISAL STANDARDS are authorized by
the by-laws of The Appraisal Foundation and are specifically for
the purposes of clarification, interpretation, explanation,
or elaboration of the Uniform Standards of Professional Appraisal
Practice (USPAP). Statements have the full weight of a
Standards Rule and can be adopted by the Appraisal Standards
Board only after exposure and comment

4) USPAP ADVISORY OPINIONS - This communication by the

Appraisal Standards Board (ASB) does not establish new
standards or interpret existing standards. Advisory Opinions are
issued to illustrate the applicability of appraisal standards in
specific situations and to offer advice from the ASB for the
resolution of appraisal issues and problems. Advisory Opinions do
not establish new standards or interpret existing standards.
Advisory Opinions are not part of USPAP and can be
approved by the ASB without public exposure and comments.

FREQUENTLY ASKED
QUESTIONS (FAQ)
USPAP Frequently Asked Questions
(USPAP FAQ) is a form of guidance issued
by the ASB to respond to questions raised by
appraisers, enforcement officials, users of
appraisal services and the public to
illustrate the applicability of USPAP in
specific situations and to offer advice
from the ASB for the resolution of appraisal
issues and problems.
USPAP FAQ is not part of USPAP and is
approved by the ASB without public
exposure and comment.

PRIVATE APPRAISERS ARE NOT OBLIGED

TO USE THE PVS, BUT MAY USE EITHER
OF THE TWO DEPENDING UPON HIM , OR
AS REQUESTED BY THE CLIENT.
THUS AN APPRAISER MUST BE FAMILIAR
WITH BOTH STANDARDS.

APPRAISAL ETHICS

APPRAISAL ETHICS
Ethics, also known as moral philosophy, is a
branch of philosophy that involves systematizing,
defending, and recommending concepts of right and
wrong conduct.
Code of Conduct (of Appraisers) :
1.
2.
3.

Addresses the ethical & competency requirements of

Valuers
Serves the public interest
Ensures that the results of valuations are reliable,
consistent, & unbiased

APPRAISAL ETHICS
THERE ARE THREE COMMON CODE OF
ETHICS FOR REAL ESTATE APPRAISERS IN
THE PHILIPPINES:
1. Code
of Ethics and Responsibilities for Real
Estate Service Practitioners
in The Philippines
2. Philippine Valuation Standards (
Philippine Valuation Standards
3. Uniform Standard Professional Appraisal
Practice

A. CODE OF ETHICS AND RESPONSIBILITIES

FOR REAL ESTATE SERVICE
PRACTITIONERS IN THE PHILIPPINES
DECLARATION OF PRINCIPLES
1. The Realty Service Practice is a noble profession, calling or
occupation and those engaged therein shall abide by and
comply with all the laws, decrees, orders and rules and
regulations enacted or promulgated by duly constituted
government authorities
2. The Golden Rule which reads Treat others as you like
them to treat you. shall be observed in all the dealings
and relation of the practitioners with clients, fellow
practitioners, the organization to which they belong, and
the general public

THE RULE OF CONDUCT AND

PRACTICE IS DIVIDED INTO 5 PARTS
1. RELATION TO THE GOVERNMENT - The Practitioner
should secure all the necessary Licenses, permits and
authority from the Government, pay all taxes, should
indicate his letterhead, dry seal, signboard, billboard,
advertisement of other announcement in relation to the
Realty Service Practice.
2. RELATION TO THE PUBLIC - The Practitioner should
be imbued with a social conscience for he does not live
by himself and his family alone but he is a part of
society with social responsibilities.

THE RULE OF CONDUCT AND

PRACTICE IS DIVIDED INTO 5 PARTS
3.

RELATION TO THE CLIENT/CUSTOMER - The Practitioner, in accepting

an appointment or authority to act for and in behalf of a client or customer
should pledge himself with utmost fidelity and good faithto protect and
promote the interest of his client without, in any manner, sacrificing the
legitimate interest of the other party in the transaction.
As a real estate appraiser, he should not render an opinion without
a careful and thorough analysis and interpretation of all factors affecting
the value of the property. His counsel and advice constitutes a
professional service for which he should make a fair and reasonable
charge.
As an appraiser, he should not undertake to make an appraisal or
render an opinion that is outside the field of his experience and
competence unless he obtains the assistance of another practitioner
familiar with such type of property or unless the facts are fully disclosed
by the client.

THE RULE OF CONDUCT AND

PRACTICE IS DIVIDED INTO 5 PARTS
4. RELATIONS TO FELLOW PRACTITIONERS - He
should not solicit a listing that is currently listed
exclusively with another broker unless the listing
agreement has expired or revoked by the owner
and the owner offers to list the same to the new
broker without soliciting the same
5. RELATION TO HIS ORGANIZATION - In the
interest of society and his own profession, calling
or occupation, the practitioner should abide by
the Constitution and By-laws of his Association or
Organization and the National Association to
which it is affiliated.

B. PHILIPPINE VALUATION
STANDARDS (PVS): ETHICS AND
COMPETENCE
In the Philippine Valuation Standards (1st Edition) this
is included in the Chapter called Code of Conduct
(COC), which must be followed by Valuers either by:
a) Choice
b) Requirements by law or regulation
c) Instruction of clients, intended users, and or national
societies or organizations.

B. PHILIPPINE VALUATION
STANDARDS (PVS): ETHICS AND
COMPETENCE

ETHICS:
Valuers should at all times maintain a
high standard of honesty and
integrity and conduct their activities
in a manner not detrimental to their
clients, the public, their profession,
or their respective national
professional valuation body.

B. PHILIPPINE VALUATION STANDARDS

(PVS): ETHICS AND COMPETENCE
INTEGRITY
1.
2.
3.

4.
5.

6.
7.

A Valuer must not act in a manner that is misleading or fraudulent

A Valuer must not knowingly develop and communicate a report that
contains false, inaccurate, or biased opinions and analysis
A Valuer must not contribute to, or participate in, a valuation service
that other reasonable Valuers would not regard to be ethical or
justified
A Valuer must act legally and comply with the laws and regulations of
the country he or she practices or where an assignment is undertaken.
A Valuer must not claim, or knowingly let pass, erroneous
interpretations of professional qualifications that he or she do not
possess.
A Valuer should not knowingly use false, misleading or exaggerated
claims or advertising in an effort to secure assignments
A Valuer shall ensure that any staff person, or subordinate assisting
with the assignment adhere to the Code of Conduct

B. PHILIPPINE VALUATION STANDARDS

(PVS): ETHICS AND COMPETENCE
CONFLICT OF INTEREST
1. must not act for two or more parties in the same
matter, except with the written consent of those
concerned
2. reasonable precautions to ensure that no conflicts of
duty arise
3. Potential conflicts should be disclosed in writing before
accepting instructions.
4. Must be disclosed immediately.
5. If after completion of the valuation, disclosure must be
made within reasonable time.

B. PHILIPPINE VALUATION STANDARDS

(PVS): ETHICS AND COMPETENCE

CONFIDENTIALITY
A Valuer must at all times deal with clients affairs with
proper discretion and confidentiality
A Valuer must not disclose sensitive factual data
obtained from the client, or the result of an assignment
prepared for a client, to anyone other than those
specifically authorized by the client

B. PHILIPPINE VALUATION STANDARDS

(PVS): ETHICS AND COMPETENCE
IMPARTIALITY
1. Perform an assignment with the strictest independence, objectivity, and
impartiality
2. Must not accept an assignment that includes the reporting of predetermined
opinions and conclusions.
3. Fees connected with an assignment must not depend on the predetermined
outcome of any valuation
4. Whether the valuers fee is or is not contingent upon any aspect of the
report must be disclosed.
5. Must not rely upon critical information supplied by the client, or any other
party, without appropriate qualification or confirmation
6. Should not accept an assignment to report on assumed hypothetical
conditions that are unlikely to be realized
7. Hypothetical conditions that are a reasonable possibility may be reported on
provided they are accompanied by some discussions
8. Should not use or rely on unsupported conclusions based on prejudiced of
any kind
9. In reviewing another valuers report, a valuer shall exhibit impartial
judgment

COMPETENCE: A Valuer must have the knowledge, skill,

and experience
to complete the
assignment efficiently in
B. PHILIPPINE
VALUATION
relation to an STANDARDS
acceptable professional
(PVS):standard.
ETHICS AND

COMPETENCE

Acceptance of Instructions Prior to accepting an

assignment or entering into an agreement to perform any
assignment, a Valuer must property identify the problem to
be addressed and be certain he or she has the experience
and knowledge to complete the assignment competently.

Outside Assistance
When engaging the services of outside assistance
necessary to compliment the Valuers own skills, a Valuer
should first establish that those assisting have the requisite
skills and ethical principles.
The clients consent should be obtained when outside
assistance is required, and the identity of the assistants
and the extent of their role should be disclosed in the
Valuers report.

EFFICIENCY
AND DILIGENCE
B. PHILIPPINE
VALUATION
STANDARDS (PVS): ETHICS AND
1. Act promptlyCOMPETENCE
and efficiently in carrying out the clients
instructions
2. Instructions should be declined where circumstances
preclude sufficient diligent enquiry, quality of work, and
completion within reasonable time.
3. Before the valuation is reported, written instructions
should be received from the client and/or confirmed in
writing by a valuer
4. Diligent enquiries and investigations to ensure that the
data for analysis in the valuation are correct and can be
relied upon.
5. Prepare a work file for each assignment
6. work file for each assignment shall be retained for a
period of five years after completion of the assignment.

B. PHILIPPINE VALUATION STANDARDS

(PVS): ETHICS AND COMPETENCE
DISCLOSURE
1.The Valuer must develop and communicate their
analyses, opinions, and conclusions to users of their
services through reports that are meaningful and not
misleading
2.The Valuation report should set out a clear and accurate
description of the scope of the assignment and its
purpose and intended use, disclosing any assumptions,
hypothetical scenarios, or limiting conditions
3.The valuation report must provide sufficient information
to describe the work performed, the conclusions
reached, and the context in which they are shaped.

B. PHILIPPINE VALUATION STANDARDS

(PVS): ETHICS AND COMPETENCE
4. A Valuer must disclose any direct or indirect personal
or corporate relationship with the property or
company that In case the Valuer is acting as an
Internal Valuer, it should be disclosed in the
valuation report.
5. In case the Valuer is acting as a External Valuer but
has worked in a fee-earning capacity for the client, it
should be also disclosed.
6. Any limitations to the quality of service that a Valuer
is able to offer must be disclosed
7. A Valuer must place a restriction against the
publication of a valuation or its conclusions without
consent
8. A Valuer should disclose any departures from the
International Valuation Standards.

B. PHILIPPINE VALUATION STANDARDS

(PVS): ETHICS AND COMPETENCE
REPORTING OF VALUES
1. Valuation Assignments may deal with one or more properties
2. The style of the valuation report must be tailored to the nature of the assignment and
the needs of the client while meeting minimum requirements as to the content.
3. The minimum contents of any report, or certificate that must be included are :
Identify the Valuer and the date of the report
Indentify the client
The instructions, date of the value estimate, purpose and intended use of the valuation
The basis of the valuation, including type and definition of value
The identity, tenure, and location(s) of the interest to be valued
The date and extent of the inspections
The scope and extent of the work used to develop the valuation
Any assumptions and limiting conditions, and any special, unusual, or extraordinary
assumptions
A compliance statement that the valuation has been done in accordance with the Philippine
Valuation Standards, and any required disclosures.
The professional qualification and signature of the Valuer
The specific certification by the Valuer in the prescribed form.

C. UNIFORM STANDARD
PROFESSIONAL
APPRAISAL PRACTICE

ETHICS RULE :
An appraiser must promote
and preserve the public
trust inherent in appraisal
practice by observing the
highest standards of
professional ethics.

C. UNIFORM STANDARD
PROFESSIONAL APPRAISAL
PRACTICE
CONDUCT - An appraiser must perform assignments with
impartiality, objectivity, and independence, and without
accommodation of personal interests.
1. Must not perform an assignment with bias;
2. Must not advocate the cause or interest of any party or issue;
3. Must not accept an assignment that includes the reporting of
predetermined opinions and conclusions;
4. Must not misrepresent his or her role when providing valuation
services that are outside of appraisal practice;
5. Must not communicate assignment results with the intent to
mislead or to defraud;
6. Must not use or communicate a report that is known by the
appraiser to be misleading or fraudulent;

C. UNIFORM STANDARD
PROFESSIONAL APPRAISAL
PRACTICE
7. Must not knowingly permit an employee or other
person to communicate a misleading or
fraudulent report;
8. Must not use or rely on unsupported conclusions
relating to characteristics such as race, color,
religion, national origin, gender, marital status,
familial status, age, receipt of public assistance
income, handicap, or an unsupported conclusion
that homogeneity of such characteristics is
necessary to maximize value;
9. Must not engage in criminal conduct;
10.Must not willfully or knowingly violate the
requirements of the RECORD KEEPING RULE

C. UNIFORM STANDARD
PROFESSIONAL APPRAISAL
PRACTICE
10.Must not perform an assignment in a grossly
negligent manner.
11.If known prior to accepting an assignment, and/or if
discovered at any time during the assignment, an
appraiser must disclose to the client, and in the
subsequent report certification:
a) any current or prospective interest in the subject
property or parties involved; and

b) any services regarding the subject property

performed by the appraiser within the three
year period immediately preceding
acceptance of the assignment, as an appraiser
or in any other capacity.

MANAGEMENT

C. UNIFORM STANDARD
PROFESSIONAL
APPRAISAL
PRACTICE

1.

An appraiser must disclose that he or she paid a fee or

commission, or gave a thing of value in connection with the
procurement of an assignment (however the disclosure of
the amount paid is not required)

2.

An appraiser must not accept an assignment, or have a

compensation arrangement for an assignment, that is
contingent on any of the following:
a. the reporting of a predetermined result (e.g., opinion
of value);
b. a direction in assignment results that favors the
cause of the client;

C. UNIFORM STANDARD
PROFESSIONAL APPRAISAL
PRACTICE
c. the amount of a value opinion;
d. the attainment of a stipulated result (e.g., that the loan
closes, or taxes are reduced); or
e. the occurrence of a subsequent event directly related
to the appraisers opinions and specific to the
assignments purpose.
3.

An appraiser must not advertise for or solicit assignments in a

manner that is false, misleading, or exaggerated.

4.

An appraiser must affix, or authorize the use of, his or her

signature to certify recognition and acceptance of his or her
USPAP responsibilities in an appraisal, appraisal review, or
appraisal consulting assignment.

5.

An appraiser may authorize the use of his or her signature

only on an assignment-by-assignment basis.

6.

An appraiser must not affix the signature of another appraiser

without his or her consent.

C. UNIFORM STANDARD
PROFESSIONAL
APPRAISAL PRACTICE
CONFIDENTIALITY
1. An appraiser must protect the confidential nature of the appraiser-client relationship.
2. An appraiser must act in good faith with regard to the legitimate interests of the client
in the use of confidential information and in the communication of assignment results.
3. An appraiser must be aware of, and comply 273 with, all confidentiality and privacy
laws and regulations applicable in an assignment.
4. An appraiser must not disclose: (1) confidential information; or

(2) assignment results to anyone other than:

the client
persons specifically authorized by the client
state appraiser regulatory agencies
third parties as may be authorized by due process of law
a duly authorized professional peer review committee except
when such disclosure to a committee would violate applicable
law or regulation.
5. A member of a duly authorized professional peer review committee must not disclose
confidential information presented to the committee.

C. UNIFORM STANDARD
PROFESSIONAL
APPRAISAL PRACTICE
RECORDKEEPING RULE

1. An appraiser must prepare a workfile for each appraisal, or appraisal review, or

appraisal consulting assignment. A workfile must be in existence prior to the
issuance of any report. A written summary of an oral report must be added to the
workfile within a reasonable time after the issuance of the oral report.
2. The workfile must include:
a. The name of the client and the identity, by name or type, of any other intended
users;
b. True copies of any written reports, documented on any type of media. (A true copy is
a replica of the report transmitted to the client. A photocopy or an electronic copy of
the entire report transmitted to the client satisfies the requirement of a true copy.);
c. Summaries of all oral reports or testimony, or a transcript of testimony, including the
appraisers signed and dated certification;
d. All other data, information, and documentation necessary to support the appraisers
opinions and conclusions and to show compliance with USPAP, or references to the
location(s) of such other documentation; and
e. A workfile in support of a restricted use appraisal report must be sufficient for the
appraiser to produce a summary appraisal report (for assignments communicated
under STANDARDS 2 and 8) or an appraisal report (for assignments communicated
under STANDARD 10).

C. UNIFORM STANDARD
PROFESSIONAL
APPRAISAL PRACTICE
3. An appraiser must retain the workfile for a period of at least five years
after preparation or at least two years after final disposition of any
judicial proceeding in which the appraiser provided testimony related to
the assignment, whichever period expires last.
4. An appraiser must have custody of the workfile, or make appropriate
workfile retention, access, and retrieval arrangements with the party
having custody of the workfile. This includes ensuring that a workfile is
stored in a medium that is retrievable by the appraiser throughout the
prescribed record retention period.
5. An appraiser having custody of a workfile must allow other appraisers
with workfile obligations related to an assignment appropriate access
and retrieval for the purpose of:
a. Submission to state appraiser regulatory agencies;
b. Compliance with due process of law;
c. Submission to a duly authorized professional peer review committee; or
compliance with retrieval arrangements

C. UNIFORM STANDARD
PROFESSIONAL
APPRAISAL PRACTICE
COMPETENCY RULE
An appraiser must:
(1) be competent to perform the assignment;
(2) acquire the necessary competency to perform
the assignment; or
(3) decline or withdraw from the assignment.

C. UNIFORM STANDARD
PROFESSIONAL
BEING COMPETENT
APPRAISAL PRACTICE
The appraiser must determine, prior to accepting an
assignment, that he or she can perform the
assignment competently. Competency requires:
1.The ability to properly identify the problem to be
addressed; and
2.The knowledge and experience to complete the
assignment competently; and
3.Recognition of, and compliance with, laws and
regulations that apply to the appraiser or to the
assignment.

C. UNIFORM STANDARD
PROFESSIONAL
ACQUIRING COMPETENCY
APPRAISAL PRACTICE
If an appraiser determines he or she is not competent prior to accepting an
assignment, the appraiser must:
1. Disclose the lack of knowledge and/or experience to the client before accepting the
assignment;
2. Take all steps necessary or appropriate to complete the assignment competently; and
3. Describe, in the report, the lack of knowledge and/or experience and the steps taken to
complete the assignment competently.

When facts or conditions are discovered during the course of an

assignment that cause an appraiser to determine, at that time, that
he or she lacks the required knowledge and experience to complete
the assignment competently, the appraiser must:
4. notify the client, and
5. take all steps necessary or appropriate to complete the assignment competently, and
6. describe, in the report, the lack of knowledge and/or experience and the steps taken to
complete the assignment competently.

C. UNIFORM STANDARD
PROFESSIONAL
APPRAISAL PRACTICE
LACK OF COMPETENCY

If the assignment cannot be completed

competently, the appraiser must decline or
withdraw from the assignment.

C. UNIFORM STANDARD
PROFESSIONAL
APPRAISAL PRACTICE
SCOPE OF WORK RULE

Assignment conditions include assumptions,

extraordinary assumptions, hypothetical conditions,
laws and regulations, jurisdictional exceptions, and
other conditions that affect the scope of work.

For each appraisal, appraisal review, and appraisal

consulting assignment, an appraiser must:

1.
2.
3.

Identify the problem to be solved;

Determine and perform the scope of work necessary to
develop credible assignment results; and
Disclose the scope of work in the report.

C. UNIFORM STANDARD
PROFESSIONAL
JURISDICTIONAL EXCEPTION RULE
APPRAISAL PRACTICE

If any applicable law or regulation precludes compliance with any

part of USPAP, only that part of USPAP becomes void for that
assignment.

In an assignment involving a jurisdictional exception, an appraiser

must:

1.
2.
3.
4.

Identify the law or regulation that precludes compliance with

USPAP;
Comply with that law or regulation;
Clearly and conspicuously disclose in the report the part of
USPAP that is voided by that law or regulation; and
Cite in the report the law or regulation requiring this exception to
USPAP compliance.

ETHICAL CODES are adopted by organizations to

assist members in understanding the difference
between 'right' and 'wrong' and in applying that
understanding to their decisions

ACTUAL SCENARIO
USPAP ADVISORY OPINIONS (P108)
Unacceptable Assignment Conditions in Real Property Appraisal
Assignments (P 160)
An Acceptable Scope of Work (P 207)
Assignments Involving More than One Appraiser (P 215)
Standards Rule 2-3 (P 43)

FREQUENTLY ASKED QUESTIONS (P 226)
Ethics Rule Conduct (P 237)
Management (P 248)
Confidentiality (P 256)
Record Keeping (P 267)
Appraisal Review (P 372)
Other Services (P 383)

THANK YOU