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FREQUENTLY ASKED QUESTIONS
real estate appraisal
Frequently Asked Questions
What is the Appraisal Institute of Canada
Founded in 1938, the Appraisal Institute of Canada AIC stands as the foremost real property valuation association in Canada and operates as a self-regulating professional organization with a membership exceeding 5400 individuals nationwide. AIC bestows the prestigious Accredited Appraiser Canadian Institute AACI and Canadian Residential Appraiser CRA designations to qualified professionals across Canada and around the globe.
What is the difference between an AACI and a CRA?
An AACI Designated Member is qualified to undertake any real property assignment where they have proven their competence regarding the specific real property type and the geographic and market factors that influence its value. This includes a wide range of property types such as residential, commercial, industrial, institutional, agricultural, land, and special use. In contrast, a CRA Designated Member is authorized to engage in residential real property assignments where they have demonstrated expertise with residential properties and the geographic and market influences affecting the value of residential dwellings consisting of no more than four self-contained family housing units or an individual undeveloped residential dwelling site.
What are the AIC Standards of Professional Appraisal Practice (CUSPAP)?
The AIC has established ethics and practice standards, widely recognized as the Canadian Uniform Standards of Professional Appraisal Practice or CUSPAP, to ensure that Members uphold their professional and ethical obligations to deliver an independent and unbiased property valuation to their clients. To maintain their expertise, AIC Members are mandated to engage in Continuing Professional Development activities, while in certain provinces such as Alberta, Nova Scotia, and New Brunswick, they must also adhere to provincial licensing requirements. Furthermore, designated appraisers are required to follow AIC’s Code of Conduct for all appraisal assignments and must be enrolled in AIC’s compulsory Professional Liability Insurance Program.
Are there different types of appraisal reports
The type of property being appraised along with the complexity of the assignment generally dictates the required report type and the associated appraisal fee. The most common types of appraisal reports include Form Reports, which are completed using a standard template and are typically utilized for valuing residential and small rental properties with one to four units, and Narrative Reports, which are presented in a detailed narrative format to document the research, conclusions, and rationale supporting the appraiser’s opinion and are more often used for complex assignments. Regardless of the format chosen, all reports prepared by an AIC appraiser must adhere to the standards outlined in CUSPAP.
How do appraisers determine the market value of a property?
Appraisers employ a diverse range of valuation techniques to ensure accurate assessments, incorporating methods such as the Direct Comparable Approach, the Income Approach, and the Cost Approach. These methods are carefully selected based on the specific type of property, its unique characteristics, and prevailing economic factors, allowing for a tailored and comprehensive evaluation that reflects the property’s true market value.
How long does it take to complete an appraisal?
The duration required to complete a real estate appraisal can differ significantly, influenced by factors such as the property type and its level of complexity. Appraisals for commercial and agricultural properties, as well as those needed for more contentious or litigious scenarios, necessitate detailed narrative reports. These more comprehensive evaluations usually require between two and three weeks to complete following the inspection process.
What is difference between Fee Simple and Leased Fee ownership?
Ownership rights to real estate encompass a broad spectrum of privileges, including the ability to utilize the property, sell it, lease it, mortgage it, gift it, or opt to exercise any or all of these rights at the owner’s discretion. Fee simple represents the most comprehensive and unrestricted type, where an individual holds absolute title to the property, free from any competing interests or encumbrances. Alternatively, a leased fee estate refers to the ownership interest retained by a landlord, who grants the right of use and occupancy to others through a lease agreement. This type of ownership is frequently appraised in the context of income-generating properties.
What is the scope of work on for an appraisal.
The scope of work for a real estate appraisal encompasses a comprehensive range of research and analysis, tailored to the specific assignment. This includes, but is not limited to, the thoroughness with which the property is inspected or identified, the depth of investigation into physical or economic factors that may impact its value, the extent of data collection and research conducted, and the type and level of analytical methods employed to formulate well-supported opinions or conclusions.
What does an inspection of the property entail?
An inspection is a key component of an appraiser’s multifaceted role, which also involves creating a detailed building description based on a range of specific data. Appraisers must have a thorough understanding of the structural features of both the interior and exterior of a property, as these elements significantly impact its market value. During the inspection, they evaluate various factors, including the physical attributes of the main building and any outbuildings, the quality of interior and exterior finishes, the condition and functionality of equipment and mechanical systems, the overall quality of improvements, the diversity of unit types along with their size and layout efficiency and signs of depreciation due to deficiencies or necessary repairs. This includes physical wear and tear from regular use, functional obsolescence that reduces a building’s utility and value, and external factors that negatively affect the property from outside influences.
What is the importance of having an AACI qualified appraiser?
Members of the Appraisal Institute of Canada (AIC) are sought after by a diverse array of clients to deliver expert, impartial assessments regarding the quality, value, or utility of a particular property. Whether a property is being sold, mortgaged, assessed, insured, or developed, engaging an AIC-designated appraiser is essential to ensure the inclusion of a skilled professional on your team of experts. The value of an AIC-designated appraiser lies in their ability to provide critical insights into a property’s true worth, aiding informed business or personal decisions. These highly qualified professionals are rigorously trained to conduct real property appraisals, appraisal reviews, consulting services, reserve fund studies, machinery and equipment valuations, and mass appraisal assignments, all within their specialized areas of expertise.