PROPERTY VALUATION SERVICES: ARE WE LOSING INTERNATIONAL COMPETITIVENESS? INTROSPECTIVE

The 2009 Real Estate Service Act will be 10 years old in July. If it accomplished anything at all, that would be in the number of licensed real estate practitioners which, roughly, tripled. But the average quality of valuation service took a deep dive. According to one expert estimate, “90% of all appraisal licensure passers actually don’t have any idea how to do the actual appraisal.”

An important lesson of the 2008 global financial crisis is that unstable real estate markets can bring down the global economy. Corollary to that, they can deprive an emerging economy with financing, stunting investments and economic growth.

The Philippines has enjoyed impressive economic growth in the last six years. Sustaining that growth to at least 7% annually requires, among others, adequate financing of investments. But without sound property valuation practices, it would be difficult to ensure the right flow of credit into the economy and mitigate lending risks.

Appropriately regulated and managed real estate markets are needed to sustain strong economic growth. Keith Lancaster, CEO of Appraisal Institute of Canada, described how strong property valuation fundamentals helped Canada’s economy weather better the global crisis in 2008.

VALUATION PRACTICE

We are nowhere near that capability, thanks to how we had implemented the 2009 Real Estate Service Act or RA 9646. The law aims to “… develop and nurture through proper and effective regulation and supervision a corps of technically competent, responsible and respected professional real estate service practitioners whose standards of practice and service shall be globally competitive and will promote the growth of the real estate industry.”

RA 9646 will be 10 years old in July. If it accomplished anything at all, that would be in the number of real estate practitioners licensed by the Professional Regulatory Commission (PRC): roughly, the number of licensed valuers at least tripled.

The average quality of valuation service unfortunately took a deep dive. According to one expert estimate,“90% of all appraisal licensure passers actually don’t have any idea how to do the actual appraisal.” The opinion came out sometime in August 2018, nine years after RA 9646.

The Professional Regulatory Board Real Estate Service (PRBRES) under the PRC should be held accountable for that. The law gave it the mandate to regulate the profession, and it has yet to deliver the result.

One indicator of success is that several formal educational institutions would already have had degree programs in real estate management. To date, I may count no more than two institutions doing that. That was about five years ago, and I don’t know if the degree programs have graduated students already, or they still exist at all.

This is understandable. It takes time for formal institutions to adopt real estate management as one of their regular programs. But 10 years comprise a long period of time. In the region, Malaysia has already reached this level of maturity of its valuation practice.

Given that formal education in valuation is out of reach, at the very least the PRC should have effectively enforced the quality of the trainings to be conducted in preparation for licensure examinations.

Instead in the case of the assessors/appraisers, it downgraded the requirement of training in the law. RA 9646 allowed government assessors and appraisers who applied for licenses two years after the effectivity of the act to be granted the license without examination. The condition is that they must have had 10 years of