on transactions, attributes of the property, as well as ancillary data concerning potential income from land and the cost of inputs into land development. These data are managed to provide upto-date and reliable information for professional appraisers as well as the general public.

Institutions that improve the information foundations of the valuation process, including training a cadre of appraisers in property valuation contribute to ensuring transparency in the valuation process, and making information of land values widely accessible. In Korea for example, until the mid-1970s, local government officials assessed the market value and replacement costs of assets for land acquisition purposes. In 1972, the government introduced the Basic Land Prices system, to improve the process of assessments. In this new system, land and buildings had to be assessed by certified private sector appraisers instead of government officials. Two private appraisers had to provide estimated values for the property and the final value was obtained as the mean of the two appraisal values. If the two appraisals differed by more than 10 percent, a third appraiser was selected and the mean recalculated. Since 2003, a third appraiser may be recommended by affected individuals as well (ADB, 2010).

Developing countries often lack the systems to record and manage this information. Transaction data, for instance, may not reflect the true price of land because of black market transactions to save on duties or heavy public subsidies on housing and land use. Land registries are often archaic and lack the dynamic functionality which allows them to be searched or updated quickly. These deficient features in transaction record management translate to a dearth of data on real estate prices, preventing analysis that is critical for land value appraisal. The implications of this bear heavily on local financing mechanisms involving real estate.

Land valuation is integral to local revenue generation since land values form the basis for activities such as property tax collection and land sales or leases. A credible system that helps “discover” and “disseminate” the value of land makes it difficult for buyers to defraud existing landowners. In the absence of such information, there is considerable scope for undervaluation of land during the acquisition process.

In countries where land valuation is successful, techniques are standardized to enable appraisers to arrive at uniform and transparent valuations. In the United States, most states require that assessors and appraisers be certified. Appraisers generally work for private clients to determine the market value of property in the event of real estate transactions, while assessors generally work for the government to determine values of properties for tax purposes.<sup>9</sup> Both agents must abide to the same regulations in valuating real property. However, for practical purposes and to avoid overestimation of prices, property prices for tax purposes are usually set at a fraction of actual market values. For example, it is generally recognized in the United States that tax assessors’ calculation of property value is about 33 percent lower than market value. In Bogotá, Colombia, property values have usually been set at between 70 and 80 percent of estimated market values.

Public land valuation in developing countries is especially fraught with challenges. These include the cost of hiring private assessors since these countries lack standardized public methods, the need to maintain and constantly update land price data and the fact that inter-governmental transfers of public land are often recorded as a zero value transaction. However, there are a

> 9 United States Department of Labor, Bureau of Labor Statistics.  Occupational Outlook Handbook, 2010-11. http://www.bls.gov/oco/ocos300.htm#oes_links

4