Ch.21 INTRODUCTION TO REAL ESTATE APPRAISAL

this chapter refers to appraisers and valuators interchangeably.

Appraiser

one who is expected to perform valuation services competently and in a manner that is independent, impartial, and objective

Appraisal (property valuation)

an estimate of the value in real property

Need for Appraisals

The flow of information concerning real property is limited and difficult to collect for the following reasons:

• The turnover rate for real property is low, meaning there are limited data sources and information available upon which to base an opinion of value.

• Every parcel of real property is distinct, unique, and heterogeneous, meaning property values cannot easily be standardized or generalized, and therefore expertise is necessary to differentiate among value influences.

• Real property is durable and long-lasting, meaning it may not be quick to respond to market pressures and thus expertise is needed to account for changes over time.

• Real property markets are local, with real estate fixed in location; real property can be affected by external influences from neighbouring properties => externalities: external influences that influence the value of real property

-The subjective perspective of buyers and sellers varies in the housing market. A feature of a house that is extremely appealing to one party may be considered neutral or negative by another

Licensing Requirements for Appraisers

-In BC, anyone may legally undertake appraisal work and charge a fee for the appraisal services.

-However, there are also complex valuation assignments such as hotels, golf courses, and First Nations lands that require appraisers with extensive valuation training and knowledge.

-the Courts may conclude that even people without formal training as appraisers are responsible for their actions in the role of appraisal work.

- A number of institutional and private appraisal associations currently operate in Canada; for example, the Real Estate Institute of BC (REIBC) and the Appraisal Institute of Canada (AIC).

-The AIC’s designations are CRA (Canadian Residential Appraiser) and AACI (Accredited Appraisal Canadian Institute).

-Many lenders work with Appraisal Management Companies (AMCs) such as Centrac or Nationwide Appraisal Services (NAS).