AAA Exam Flashcards
List the assessment classes.
Class 1 - residential
Class 2 - non-residential
Class 3 - farmland
Class 4 - machinery & equipment
Class 2 allows for the following subclasses (as per MRAS - Matters Relating to Assessment Sub-Classes Regulations which came into effect Jan 1, 2018)
a) vacant non-residential property
b) small business property
c) other non-residential property
Council may divide class 1 into sub-classes on any bases it considers appropriate (by bylaw).
What is reproduction cost?
An exact duplicate or replica of the building being appraiser, insofar as possible, using the same materials, construction standards, design, layout, quality of workmanship and embodying all the deficiencies, super inadequacies and obsolescence of the subject improvements.
What is replacement cost?
A substitute for the building being appraised using contemporary materials, standards, design and layout.
What does the AAA do?
The association is a nonprofit run by its member volunteers. They strive to be recognized as leaders and experts in Property Assessment in Canada.
They provide expertise and leadership for members and public through education, advocacy and ethical standards of practice to ensure fairness, equity and transparency.
They strive to:
a) advance high quality education to members
b) grow membership within the industry
c) strengthen external relationships
d) advocate on behalf of membership to facilitate understanding of our profession.
What does AMAA stand for?
Accredited Municipal Assessors of Alberta
Describe the basic steps for the cost approach
- Estimate the land (site as if vacant and available for development to its highest and best use).
- Estimate the total cost of the improvements as of the appraisal date, including: direct costs, indirect costs & entrepreneurial profit from a market analysis.
- Estimate the total amount of accrued depreciation attributable to physical deterioration, functional obsolescence and external (economic) obsolescence.
- Subtract the total amount of accrued depreciation from the total cost new of the primary improvements to arrive at the depreciated cost of improvements.
- Estimate the total cost new of accessory and site improvements. Estimate and deduct all accrued depreciation from the total cost new.
- Add site value to the depreciated cost of the primary improvements, accessory improvements and site improvements to arrive at a value indication determined by the cost approach.
Which committees are optional/discretionary?
Legislative Policy Committee
Marketing, Communications & Public Relations Committee
Nominating Committee
Conference & Symposium Planning Groups
Which committees are required by legislation?
Executive Committee
Registration Committee
Practice Review Committee
Discipline Committee
How can you further promote the assessors association and the profession?
You can support the association by attending AAA conferences and events. You can also volunteer for committees and encourage new assessors to apply for candidacy.
Which committee are you interested in volunteering for? And why?
The practice review committee.
I believe continuing education is a very important aspect of a professional career. It is important to stay educated and understand how the industry is changing.
Since the practice review committee promotes continuing education and develops educational standards, I think I would be an asset to this committee.
Give three examples of committees in the AAA
Executive Committee - manages the property, funds & affairs of the association (required by legislation)
Registration Committee - considers membership applications & assists applicants working towards their AMAA designation (required by legislation)
Practice Review Committee - evaluates and develops educational standards for the practice of assessment; promotes development for continuing education programs (required by legislation)
Discipline Committee - investigates and reviews complaints submitted on the professional conduct of any regulated member (required by legislation).
Give three examples of “shall nots” from the code of conduct and ethics
- Under take assessments for which they are not qualified through either lack of education, experience of ability.
- Claim professional qualifications that are misleading or not factual.
- Make any irresponsible public statements of value.
- Disclose any information of a confidential nature to any person except when required by law, and contravene legislative provisions, bylaws and/or standards of practice under which they are bound.
Give three examples of “Shall dos” from the code of conduct and ethics
- Be dedicated to the profession
- Perform the practice of assessment with fairness, honesty and integrity
- Apply expertise and due diligence in performing the practice of assessment
- Report to the association conduct by any member that may be considered unethical
Briefly describe the steps of the Direct Comparison Approach.
- Gather research and investigate the market for information relating to properties that have sold, listings and properties under contract. Take into account all factors such as location, size, land use, physical condition, property type and date of sale.
- Verify the data you have collected. Confirm the transactions are arms-length.
- Determine a relevant unit of comparison to base your analysis on. This is done to define and identify the best unit of comparison which can be used to explain the market as of the effective date of the appraisal.
- Analyze the appropriate elements of comparison and identify the differences between the comparables and the subject. Select the most similar properties and adjust for the differences between the subject and the comparables.
- Reconcile the value indications discovered in the previous step to arrive at a single market estimate of value.
Briefly describe the steps of the Income Approach
- Research income and expense data for the subject and comparable properties.
- Estimate the potential gross income of the property by adding the rental income and any other potential income.
- Estimate the vacancy and collection loss.
- Subtract vacancy and collection loss from total potential gross income to get the Effective Gross Income for the subject property.
- Estimate the total operating expenses for the subject by adding fixed expenses, variable expenses and a replacement cost allowance (if applicable).
- Subtract the estimate of total operating expenses from the estimate of effective gross income to arrive at the net operating income.
- Apply either direct or yield capitalization techniques to this data to generate an estimate of value using the income approach.
