Appraisal Industry

[Luong98]

The real estate appraisal industry is an interesting and diverse field to work in. The industry has changed a lot, particularly over the past 10 years as new regulations and stringent professional requirements seem ever increasing.

Individuals who wish to become licensed as candidates or appraisers in Alberta for the first time must become a member in good standing of a professional appraisers’ association recognized by RECA prior to becoming licensed in Alberta.

The three professional associations are the:

· Appraisal Institute of Canada (AIC)

· Canadian National Association of Real Estate Appraisers (CNAREA)

· Alberta Assessors’ Association (AAA)

Each association establishes standards of education and training required to become members in good standing. Once you have met these requirements, you may apply to the Real Estate Council of Alberta to conduct real estate appraisals as a candidate or as an appraiser, as the case may be. Once you have obtained membership in one of the three appraisal associations (above), you may apply for a license from RECA.

The AIC is the oldest and largest valuation association in Canada. The AIC grants the:

· AAIC - Accredited Appraiser Canadian Institute

· CRA - Canadian Residential Appraiser

Members admitted to the AIC after January 1st, 2006 CAN NOT achieve a designation from the AIC without completing an undergraduate degree. The implementation of this single policy has changed the residential appraiser industry in two major ways.

1. Those people wishing to become a designated residential appraiser and who DO NOT have or wish to pursue an undergraduate degree must follow the DAR designation path as offered through CNAREA.

2. Many people with an undergraduate degree who wish to become a designated member will follow the AACI designation path and not the CRA path given the limitations of the CRA designation in relation to the superior AACI designation, and further given the implementation of the PGCV educational program through UBC which expedites attainment of the AACI.

If ones ambition is to become a residential property appraiser then it is highly recommended that the benefits of membership and designation status within both AIC and CNAREA be considered and contrasted against each other. Ones educational background and commitment to further studies must also be considered.

CNAREA is a national independent association that certifies and regulates real property appraisers in Canada. This association offers five designations including:
· DAR - Designated Appraiser Residential

· DAC - Designated Appraiser Commercial

· DAC - Designated Appraiser Commercial with a Specialty in Agriculture

· CMAR - Certified Mortgage Appraisal Reviewer

· Certified Appraisal Reviewer

The DAR designation is becoming more popular and prevalent in the Canadian real estate valuation profession. Historically the DAR designation has been a lessor known and accepted designation in contrast to the more widely accepted CRA designation. With the proliferation of CNAREA membership throughout Canada the number of DAR designated professionals within the industry has increased. With an increased presence the DAR designation is increasingly becoming more widely accepted by banks and other financial institutions within Canada.


Quoted from Plant & Associates Appraisal Services Inc.

 

[kir]

Hi Luong98,

Can you explain the general methodology used for doing a 4,5,6 plex to estimate value?
No need to explain the usage of cap rates. I`m interesting in the work and steps needed to estimate value if the house is
new or if the house is old.

Then explain how an assessor would assess the same building for taxation purposes.

If the two techniques are different, could such variance be used for assessment appeals? For example, the appraisal uses the highest and best use
estimate of value (ex. 300K)...but for some strange reason, the assessing authorities might assess the same with 350K. The result is higher taxes.

What are you thoughts?

 

[Luong98]

QUOTE (kir @ Feb 12 2010, 11:50 AM) Hi Luong98,

Can you explain the general methodology used for doing a 4,5,6 plex to estimate value?
No need to explain the usage of cap rates. I`m interesting in the work and steps needed to estimate value if the house is
new or if the house is old.

Then explain how an assessor would assess the same building for taxation purposes.

If the two techniques are different, could such variance be used for assessment appeals? For example, the appraisal uses the highest and best use
estimate of value (ex. 300K)...but for some strange reason, the assessing authorities might assess the same with 350K. The result is higher taxes.

What are you thoughts?

In regards to assessment appeals, you`ll need to know the basis for the assessed value: Fair Market Value as of 1/1/10. Talk to your local assessor.

Assessors typically do Mass Appraisals. Having a value that is substantially different from your neighbors who have like and similar homes is called "inequitable taxation". This is very easy to appeal once you demonstrate where the problem is. It could be as simple as a mistype for depreciation or giving you credit for a swimming pool you don`t have. Always start with the errors first.

i.e. there is usually lots of errors or misrepresentation in site value, gross living area, basement development, etc.

Many times that will result in a reduction.

Good luck.

 

[kir]

Thanks David,

The 2nd largest cost to maintaining a real estate investment, usually, is the property tax.
One of my investment has a fairly high taxation rate (mill rate is almost 2). This is compounded by a capped assessment policy (ex. Nova Scotia).

Anyway, I appealed (on one of my properties) on the basis of market comparables and on the basis of using NOI and cap rates..

But good point about phoning the local assessor, I was waiting for him/her to call me.

Kir.