AIC 101 – Introduction to the Appraisal Profession

AIC 101 – Introduction to the Appraisal Profession

Your Presenters 2

AIC 101 - Overview Introduction to AIC – Answer some of the common questions from individuals considering a career in real estate appraisal Module 1 – Pathway to Designation (approx. 45 minutes) – Provide an overview of the steps to designation – Questions to follow ------------------------------10 minute break----------------------------------------- Module 2 – Principles of Conduct (approx. 1 hour) – Provide an overview of the professional standards of AIC members – Questions to follow Next Steps 3

About AIC The leading real property valuation association with more than 5,400 members across Canada. Established in 1938, the AIC works collaboratively with its 10 provincial affiliate associations to grant the distinguished Accredited Appraiser Canadian Institute (AACI TM) and Canadian Residential Appraiser (CRA TM) designations. AIC’s mission is “to promote and support our members in providing high quality property advisory services for the benefit of clients, employers, and the public.” AIC is a self-regulated organization 4

The AACI and CRA designation ACCREDITED APPRAISER CANADIAN INSTITUTE (AACI ) AACI members are qualified to offer valuation and consulting services and expertise for all types of real property. CANADIAN RESIDENTIAL APPRAISER (CRA ) CRA members are qualified to offer valuation and consulting services and expertise for individual, undeveloped residential dwelling sites and dwellings containing not more than four self-contained family housing units. 5

Membership Categories Student Member Less than 2 yrs post secondary Candidate Member Min. 2 year postsecondary Pursuing AIC Program of Professional studies Working in the industry and completing applied experience Designated Member Completed AIC Professional Program of Studies Completed Applied Experience, Exam and PCI Completed Degree 6

When are appraisers engaged? When an unbiased, independent market value is needed to make real estate decisions, including: Renovating, building, buying or selling property Financing or refinancing property Making real estate investment decisions Reviewing property tax assessments Assessing capital gains Determining “Cost New” for insurance purposes Determining expropriation compensation Valuing property for family law – divorce, estates, arbitration Valuing real estate for business mergers, acquisitions or dissolutions Valuing private property acquired by governments for public use Appraisal of Machinery and Equipment 7

What career paths are open to AICdesignated appraisers? Fee Self-employed Valuation firms Real estate consulting 8

Meet our Members 9

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Is there a demand for appraisers? YES!! Demand for our members services is growing. In 2017, AIC our fee members conducted more than 1 million appraisals worth more than 1.3 Trillion. Like other industries, many Designated Members will be semi-retiring or retiring Demand varies across the country depending on services, property and market forces Many positions are posted on the AIC website. Check it out! 11

What salary do appraisers make? The income for appraisers will vary, based on: – – – – – – – – – – Experience Types of property Types of services Niche services/specialties Market/Region Fee or non-fee Sole proprietor vs owner of a medium-larger firm Work/life balance Arrangements with employers (e.g. salary, benefits, etc) Business development activities 12

AIC Designated Members are CANADA’S REAL ESTATE APPRAISERS OF CHOICE AIC’s designation process is one of the most comprehensive educational programs within the real estate appraisal profession Developed and delivered in partnership with the Real Estate Division of the Sauder School of Business, University of British Columbia and Université Laval, the AIC Program of Professional Studies ensures that members earning their designation do so with the assurance of a strong educational foundation that prepares them to meet the changing demands of the profession. AIC Designated Members are highly respected across Canada and around the world. 13

Module 1: Pathways to Designation Presented by: Kevin Collins, Director, Member Education 14

What Do You Need To Be Designated? – – – – – – AIC Program of Professional Studies Work experience through the Applied Experience Program Completion of 3 Work Product Reviews Applied Experience Examination Professional Competency Interview University degree 15

Module 1 Admission Requirements Education Requirements Experience Requirements Questions 16

Admission Requirements 17

First Step – Admission to Candidacy To be eligible for Candidacy, you must have: Minimum of two years of post-secondary education from a Canadian accredited college, university or CÉGEP You must complete the following courses prior to becoming an active Candidate Member: AIC 101 - Introduction to the Appraisal Profession; Introduction to Professional Practice; and BUSI 330 - Foundations of Real Estate Appraisal course Once completed, you can apply to your Provincial Association to become a Candidate Member of the AIC. 18

AIC’s Program of Study Education Exam and Interview Experience 19

Education Requirements 20

Accredited Appraiser Canadian Institute (AACI) Pre-core requirements: 1. 2. BUSI 100 Micro Foundations of Real Estate Economics BUSI 101 Capital Markets and Real Estate Requires 13 University of British Columbia (UBC) core courses, or equivalent : 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. BUSI 111 BC Real Property Law and Real Estate Ethics OR BUSI 112 Canadian Real Property Law and Real Estate Ethics BUSI 121 Foundations of Real Estate Mathematics BUSI 293 Introduction to Financial Accounting BUSI 300 Urban and Real Estate Economics BUSI 330 Foundations of Real Estate Appraisal BUSI 331 Real Estate Investment Analysis and Advanced Income Appraisal BUSI 344 Statistical and Computer Applications in Valuation BUSI 400 Residential Property Analysis BUSI 401 Commercial Property Analysis BUSI 442 Case Studies in Appraisal I BUSI 433 Real Estate Business OR BUSI 443 Foundations of Real Property Assessment and Mass Appraisal BUSI 452 Case Studies in Appraisal II BUSI 460 Critical Analysis and Forecasting in Real Estate Plus: Guided Case Study: BUSI 497 Agricultural Guided Case Study OR BUSI 499 Income Property Guided Case Study 21

The PGCV Option Individuals with a business or commerce degree may pursue an AACI designation through completion of the Post-Graduate Certification in Valuation (PGVC) course of study. Core Courses: 1. BUSI 330 Foundations of Real Estate Appraisal 2. BUSI 331 Real Estate Investment Analysis and Advanced Income Appraisal 3. BUSI 401 Commercial Property Analysis 4. BUSI 442 Case Studies in Appraisal I 5. BUSI 452 Case Studies in Appraisal II Elective Courses: In addition to the 5 core courses, 1 of the following elective courses is required: BUSI 300 Foundations of Real Estate Economics BUSI 344 Statistical and Computer Applications in Valuation (as of January 2007) BUSI 443 Foundations of Real Property Assessment and Mass Appraisal BUSI 460 Critical Analysis and Forecasting in Real Estate Plus: Guided Case Study: BUSI 497 Agricultural Guided Case Study OR BUSI 499 Income Property Guided Case Study 22

Canadian Residential Appraiser (CRA) Pre-core requirements: 1. 2. BUSI 100 Micro Foundations of Real Estate Economics BUSI 101 Capital Markets and Real Estate Requires six UBC core courses, or equivalent, including: 1. 2. 3. 4. 5. 6. BUSI 111 BC Real Property Law and Real Estate Ethics OR BUSI 112 Canadian Real Property Law and Real Estate Ethics BUSI 330 Foundations of Real Estate Appraisal BUSI 344 Statistical and Computer Applications in Valuation OR BUSI 121 Foundations of Real Estate Mathematics BUSI 352 Case Studies in Residential Valuation BUSI 400 Residential Property Analysis BUSI 443 Foundations of Real Property Assessment and Mass Appraisal Plus: Guided Case Study: BUSI 398 – Single Family Case Study OR BUSI 444 – Comprehensive Case Study Examination equivalency 23

Experience Requirements 24

Experience - Overview To ensure the most comprehensive training for Candidate Members, there are several “hands-ons” designation requirements. They include the: – Work Product Review (WPR) – Applied Experience Program (AEP) Both WPR and AEP can be done in parallel with the educational component 25

Work Product Review Purpose of the WPR is to provide Candidate with a better understanding of Canadian Uniform Standards of Professional Appraisal Practice (CUSPAP). Three samples of work product need to be submitted at various stages of Candidacy – Regardless of fee or non-fee Submitted work will be “peer reviewed”, by competent Designated Members, to assess compliance with CUSPAP standards Feedback will be shared with the Candidate 26

What are some examples of work products that can be submitted? Each submission should demonstrate a different type of CUSPAP compliant work product, with increasing complexity. Work Product can be any one of the following professional services: Appraisal of real property Review Consulting Reserve Fund Studies Appraisal of Machinery and Equipment Mass Appraisal 27

What are the timelines for submission? Submissi on #1 Within 6 months of admission to Candidacy Submissi on #2 Ideally halfway through Candidacy Submissi on #3 Within 4-6 months prior to registering for the Applied Experience exam If the third submission does not meet CUSPAP requirements, a resubmission will be required within 30 days. 28

Applied Experience Program (AEP) AEP provides practical experience within the valuation industry and ensures that all Candidate Members: – obtain relevant experience in the application of the First Principles of Value in a professional setting – develop the professional competencies of AIC members that are expected by clients 29

What are the First Principles of Value? First Principles of Value include critical concepts required to deliver valuation of real property and form the basis for the assumptions you, as an appraiser, will make in reporting to a client. They include, but are not limited to: – – – – – – – – Problem identification Purpose of the report Land Use Regulations Legal Issues Property Characteristics/Property Rights Highest and Best Use Economic Variables Research 30

How Candidates Learn First Principles First Principles – The first principles are the basis for all appraisal assignments. This can be learned through: – Education – AIC education partners incorporate the First Principles into their program – Supervisor – When reviewing any assignment the supervisor should be discussing the Principles with Candidate – AIC Webinars – AIC is developing webinars for Candidates throughout their Candidacy – WPR – AIC Peer Reviewers see the first principles in reports and offer feedback that helps the Candidates 31

What competencies do successful appraisers have? Client Service Analytical Thinking Successfu l Appraiser Focus on Quality Conceptual Thinking Decisiveness 32

How Candidates Learn Competencies Technical and Behavioural Competencies – These are learned through education and experience. – UBC and ULaval teach all the technical competencies – Core competencies are developed throughout working in the field under supervision – Candidates may learn from many different people to achieve these competencies 33

Minimum AEP Requirements The duration of Applied Experience requirements depends on your designation: For an AACI you are required to attain no less than two years of applied experience within the last 4 year period before exam For a CRA you are required to attain no less than one year of applied experience within the last 2 year period before exam 34

Tracking your Experience AIC will develop an online Progress Report which will ensure that Candidates use the tool to track their experience AAC will monitor the content inputted by Candidates to look for trends where gaps are in the program The online tool will be able to notify Candidates if they are missing information This will be a benefit to Candidates not an obstacle 35

How to be a successful Candidate? To be successful, a Candidate Member must: – – – – – – – – Be willing to learn Earn the trust of your supervisors(be prepared, timely, etc.) Be able to admit errors and correct them Be able to evaluate yourself objectively Know your career goals, strengths/weaknesses Understand your optimum learning style Be professional at all times Be diligent in filling out the Progress Report 36

Exam Eligibility At the end of your applied experience, the Candidate is required to submit the following reports to AIC: – AEP Progress Report – Professional Resume and supporting document confirming they have completed the AIC Program of Study, the University Degree requirement and Work Product Review Once documentation is approved, the Candidate is ready for the Applied Experience Examinations: – Written Exam – Professional Competency Interview 37

Applied Experience Written Exam Assesses a Candidate Member’s understanding of First Principles of Value and experiential knowledge Remember: To write the exam you need to complete your: – – – – University degree Education requirements Guided case study Applied Experience Program AEP Progress Report – Completion of Work Product Reviews – Completion of a Professional Practice Seminar within two-years immediately preceding the Applied Experience exam 38

Applied Experience Written Exam The exam is administered through UBC and marked by a trained AIC Designated Member – – – There are several options for Examination Dates and Locations – Exam consists of one case study (40%) Three short answers (60%) Pass mark is 70% Registration for the exam required 30 days in advance AIC has several resources and helpful guides to successfully. write your exam 39

Professional Competency Interview – The Final Step Upon passing the written exam (70% ), you must: – Contact AIC to complete the AIC Designation Application Form – Schedule your Professional Competency Interview The PCI is conducted by trained AIC Designated Members Competencies tested are: analytical thinking, conceptual thinking, decisiveness, focus on quality and client service Resources and guides are available for AIC Candidate Members 40

Resources are online to help! SHOW WEBSITE!!! DEFINE PRINCIPLES OF VALUE PROGRESS FORM – connect to the Candidate Central 41

Continuing Professional Development (CPD) The AIC’s CPD Program encourages and fosters continuous learning, while concurrently ensuring the AIC meets its obligations of protecting the public interest. To ensure AIC members’ development, both Candidate and Designated Members have a minimum requirement for CPD. All members require 24 credits in a two-year cycle One credit is one hour of organized learning on a relevant topic Ensures that Candidate Members obtain at least one university course/cycle Remember: there is a 10-year deadline to become designated. Plan your courses accordingly to ensure you achieve your designation within that time frame. 42

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AIC Principles of Conduct Module 2 Presented by: Mike Schulkowsky, AACI, P.App AIC Director, Appraisal Review 44

Module 2 AIC Regulatory Documents and Policies Code of Conduct CUSPAP Consolidated Regulations Candidate Registry Complaints 45

Standards of Professional Practice Members are regulated through the AIC’s Code of Conduct Ethics and standards of professional appraisal practice known as the Canadian Uniform Standards of Professional Appraisal Practice (CUSPAP) Bylaws and Regulations Policies Protect the public interest by members acting responsibly, impartially, objectively, and with independent judgment. Honesty, integrity, fairness and respect are cornerstones of confidence and trust. 46

Code of Conduct Members are expected to: Engage in conduct that will enhance their professional status, the reputation of the Institute, the profession, and the confidence and interest of the public As appraisers, you represent the AIC and, often, your clients as well when you meet with a property owner or occupant. As designated CRAs and AACIs you represent the AIC brand, the two most highly recognized designations in the industry national, and internationally for the AACI. Students and Candidates represent the future of AIC With that comes the responsibility for members to commit themselves to principles that reflect the highest standards of professionalism 47

Canadian Uniform Standards of Professional Appraisal Practice (CUSPAP) 48

Finding CUSPAP on AIC website (www.AICanada.ca) 49

Standards of Professional Appraisal Practice AIC members are required to adhere to The Canadian Uniform Standards of Professional Appraisal Standards (CUSPAP) whenever they are undertaking a professional service. CUSPAP contains: Compulsory Definitions Seven Practice Standards each containing compulsory Rules and Comments 1. Ethics Standard 2. Real Property Appraisal Standard 3. Review Standard 4. Consulting Standard 5. Reserve Fund Planning Standard 6. Machinery and Equipment Appraisal Standard 7. Mass Appraisal Standard Non-compulsory Practice Notes 50

CUSPAP Ethics Standard Rules Ethics Standards sets out the requirements for integrity, impartiality, objectivity, independent judgment and ethical conduct. Complying with CUSPAP Upholding the reputation of the profession Competence and Qualification Avoiding misleading/fraudulent behaviour Avoiding conflict of interest Cooperating with the AIC 51

CUSPAP Real Property Appraisal What is real property? – interests, benefits, and rights inherent in the ownership of real estate. What is expected in a report AIC Forms and Templates – – – – – – – – – – Client, Intended Use, Subject, Purpose Economics, Market Trends, Supply and Demand, Neighborhood Highest and Best Use, Zoning Site, Land and Building Details Comparable Sales or Rents History Exposure Time Reconciliation Definitions Scope, Certification 52

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CUSPAP Review Standard Rules What is review? – Opinion about the quality of an appraisal – Review is a test of compliance with CUSPAP standards What is expected in a report – – – – Opinion whether the scope is appropriate Opinion on data, adjustments and techniques Opinion on reliability Reasons for disagreement 56

CUSPAP Consulting Standard Rules What is consulting? – An assignment other than estimating value Land utilization studies Highest and best use analysis Marketability/Feasibility/investment studies Expropriation Property condition assessments Other research related assignments Assessment appeal – – – – Legislation Tax class, exemptions Sources for how assessments are calculated Sources for comparable properties 57

CUSPAP Reserve Fund Study Standard Rules What is a reserve fund study? – Budget planning tool which identifies the current status of the Reserve Fund and a Funding Plan – Two parts Physical Analysis Financial Analysis Reserve Fund Study What is expected? – – – – – – Legislation Specific components Benchmarks Cash flow projections Adequacy of funds Reserve fund model 58

CUSPAP Machinery & Equipment Appraisal Standard Rules What is machinery & equipment? – physical facilities available for production, – all other equipment designed or necessary for manufacturing purposes, – items of furniture and fixtures necessary for the administration and proper operation of the enterprise. What is expected in a report – Property type, machinery type – Current or alternative uses – Definitions (salvage value) 59

CUSPAP Mass Appraisal Rules What is mass appraisal? – process of valuing a universe of properties as of a given date utilizing standard methodology, employing common data, and allowing for statistical testing – Property tax assessment – Automated valuation models, algorithims What is expected in a report – – – – Description of property Models, statistics, market studies Provincial statutes Legislated definitions of value 60

Regulations What do they do? – They regulate the relationships between: the AIC and its members The AIC and its affiliates What does this include: – – – – – Candidates/Students Provincial Associations Volunteer Committees Complaints Insurance Admission to Student Membership 2.28 Authority 2.28.1 The Board shall be the sole authority for the establishment of policies and criteria for admission of Student Members. 2.29 Membership Criteria 2.29.1 Student membership applicants may have a variety of educational backgrounds, such as: 2.29.1.1 a bachelor’s degree; 2.29.1.2 a college diploma; 2.29.1.3 partial post-secondary credits; or 2.29.1.4 a high school diploma. 2.29.1.5 All of the above scenarios are acceptable for application to the program. Mature students over the age of 21 with a minimum of two years of work experience also will be accepted. 61

Bylaws Students and Candidates are both Non-Voting Members of the AIC Non-Voting Members: Pay dues Receive notice of meetings of the membership Cannot vote at member meetings Student Member: A Student Member shall be a person: Enrolled full or part time in a recognized course of study but has not yet met the requirements or have not yet applied for Candidate status. Candidate Member: An AIC Candidate Member shall be a person: Has not yet completed the requirements for designation Is enrolled in the AIC’s program of professional studies Meets the minimum requirement for Non-voting Membership in the AIC 62

Working as an AIC Member Fee Self-employed Valuation firms Real estate consulting Non-Fee Government Assessment agencies Mortgage Insurers Financial Institutions Appraisal Management Companies Crown Corporations 63

Working as an AIC Member Fee ABC Appraisal Co. Altus CBRE Colliers Cushman Wakefield REITs Non-Fee Farm Credit Canada Canada Revenue Agency CMHC BC Assessment MPAC Banks GWL Credit Unions RECA (Alberta) OSRE (BC) 64

Working as an AIC Member Homes Condos Acreage Vacant land Agriculture Fee / NonFee Special Purpose Linear Retail Warehouse /Industrial Hotels B&B 65

Professional Tools Laser, dimensional and angle measuring devices Aerial maps, orthophotos Drones Cameras GPS Excel Statistical software Cloud storage 66

AIC Candidate Co-Signing Registry No Registration No Insurance. The AIC cannot back-date a co-signing relationship. 67

AIC Candidate Registry Why does the AIC have a Candidate Registry? To provide guidance to Candidate Members from experienced AIC Designated members – A Co-Signer has specific responsibilities to the Candidate for whom s/he is co-signing Preparation for the exam and interview Protection from liability Insurance coverage – An AIC Candidate Member must be properly registered in the AIC Candidate Co-Signing Registry with an appropriately designated AIC member before undertaking any professional services in order to have insurance coverage 68

AIC Candidate Registry Mandatory Candidate Registry Designated Members must register the Candidate members whose reports they are co-signing in the Candidate CoSigning Registry. If the certification of value in the report bears the signature of two or more members as joint authors, each member is responsible for the entire report. A member cannot co-sign a report with a student or nonmember. 69

AIC Candidate Registry Candidate Responsibility Candidates are responsible for the accuracy of their information and registered status in the Registry. Candidates must advise the co-signing Designated Member(s) of changes in membership status that impact the professional liability insurance coverage (i.e. suspension of membership and/or designation). 70

Professional Practice Providing Advice to AIC Members AIC Members may seek the advice of the AIC on professional practice matters such as: general enquiries relating to day-to-day issues interpretation or clarification on ethics and standards to ensure compliance assessing client requests and compliance to CUSPAP specialized expertise intentions of complaint suspicion or victim of valuation fraud bounce ideas off an independent and objective 3 rd party 71

Complaint Resolution Process to address professional practice complaints against AIC members aims are educational and the prevention of recurrence of Focused solely on following CUSPAP CRP does not: – – – – – act as a court of law order the refund of appraisal fees give legal advice arbitrate the final opinion of value coincide with or be complementary to any third party matter outside AIC mediation, litigation, negotiation, financing 72

Next Steps 73

Next Steps Things to do first Then Submit Work Product Review #1 Complete BUSI 330 Contact Provincial Affiliate to apply to be a Candidate Member Complete the Introduction to Professional Practice Within YR 1 Register for UBC class(es) Begin tracking work experience using your Progress Report 74

We’re Here to Help Question about your education qualifications/credits, registering for classes, registering for AEP Written Exam Contact UBC Questions about applying to be a Candidate, classroom Professional Practice Seminar, provincial networks/meetings opportunities Contact Provincial Affiliate Questions about membership benefits, Work Product Review, CPD, Professional Competency Interviews, Applied Experience, Professional Practice Seminar online/webinar, membership dues, liability insurance Contact National Office 75

The AIC National Board – Working on your Behalf 76

National Staff- Always Available to Help 77

The Annual Costs Membership Dues: September 30th renewal Annual National Dues 675 for all Member Types Provincial Dues – 140- 450 800 - 1,025 *First year Candidates have reduced fees 2018 Professional Liability Insurance: January 15 renewal Candidate Non-Fee 65-69 Candidate Fee 2,178 - 2,288 78

Leverage the Benefits of Being an AIC Member Network instantly with your appraisal colleagues across Canada Full access to the Members-Only section of the AIC web site; A subscription to Canadian Property Valuation, the official magazine of the Appraisal Institute of Canada; Access to our partner – the Appraisal Institute’s - Y.T. and Louise Lee Lum Library Members’ registration privileges at AIC conferences, and continuing education programs; Eligibility to participate in AIC affinity programs including home and automobile insurance; and Receipt of the Communiqué, AIC’s regular electronic newsletter on Institute initiatives and events. 79

Consider Volunteer Opportunities As a Candidate Member you can become an active volunteer in various national, provincial, and chapter committees Attend local or provincial CPD events and networking opportunities Be involved! It will help you make valuable contacts and expand your knowledge! 80

Get Connected! Follow the AIC Exchange (www.aicexchange.ca) to learn more about the industry Follow AIC on its social media channels 81

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