Chapter 15 - Real Estate Appraisal

Question 1

Appraisal industry organizations

Answer 1

REIBC and Appraisal Institute of Canada (AIC)- Canadian Residential Appraiser, Accredited Appraisal Canadian Institute

Question 2

legal interests in real estate

Answer 2

1. fee simple ownership
2. leasehold
3. condo
4. air space rights
5. easements
6. any combo of above

Question 3

Transactional Elements

Answer 3

1. time allowed for sale
2. amount of advertising
3. relationship between the parties to the sale
4. terms of financing involved
5. special purchasers

Question 4

define highest and best use

Answer 4

use of land which, within all legal, physical, financial and market constraints, will provide the maximum net return during the foreseeable future

Question 5

latent value

Answer 5

value possessed by a property that has potential for redevelopment because it is currently not employed at its highest and best use

Question 6

three approaches to value

Answer 6

1. direct comparison approach - comparative or market approach
2. income/investment approach
3. cost approach

Question 7

principle of substitution

Answer 7

approach to appraisal stating that a property’s value should not exceed the cost of purchasing an alternate property that can provide similar utility

Question 8

estimate of market value using cost approach

Answer 8

value of vacant land + cost of replacing current improvements = total value - depreciation of current improvements = market value