A pre-purchase inspection entails the inspection of visible and accessible systems and components of a building. On the other hand, the appraisal aims to estimate the market value of the property.

The purpose of the inspection is to identify major defaults which diminish the use, enjoyment and value of a property or a default which may represent a risk for the security of the occupants but not to estimate its value. The inspection’s purpose is to verify the state of the elements observed at the time of the inspection. The inspector observes and submits comments on the state of the systems and their components. Even if the physical state of the building tends to influence its value, the Chartered Appraiser will not inspect the building as thoroughly as would the inspector and will no write a report on the state of repairs of the building except to mention in his report certain evident factors which have an impact on its value.

In virtue of article 36 of the Professional Code of Quebec,

"No person shall in any way whatsoever: (…)

(j) use the title “Chartered Appraiser” or “Chartered Assessor” or any other title or abbreviation which may lead to the belief that he is a chartered appraiser or chartered assessor, or use letters which may lead to the belief that he is a chartered appraiser or chartered assessor, or the letters “C.App.” or “E.A.”, unless he holds a valid permit for such purpose and is entered on the roll of the Ordre professionnel des Évaluateurs Agréés du Québec." (www.oeaq.qc.ca)

Before obtaining this designation, a candidate which exercise the profession has to detain a university diploma giving way to the permit, to have completed a one year professional training under the supervision of a member of the Order, to have attended the training courses of the Order pertaining to the governing professional practices and code of ethics, successfully pass the admission examination and meet certain other formalities.

Only the “Chartered Appraiser” designation guaranties quality services and protection to the public. In order to verify if an appraiser is inscribed at the board of members, one can address itself at the Ordre des Évaluateurs Agréés du Québec or consult the on-line membership directory.

The job of a Chartered Appraiser consists to express a motivated objective opinion on the value of moveable or property rights at a given date. Prejudices, personal interests and preferences do not figure in his professional methodology.

Member of a professional order, he must respect norms of practice and a code of ethics. He is also submitted to inspections toward his professional practice. Furthermore, insurance for professional liability constitutes another resort for his clientele.

The Chartered Appraiser practices his profession in the private or in the public sector, for the benefit of persons, enterprises, institutions or governments.

We retain the services of a Chartered Appraiser because his opinion is motivated, reliable and impartial ... which makes him a precious real estate adviser.

Most individuals are called upon, at least once in their life time, to take an important decision out of their usual customary concerns:

• To sale, to acquire or to construct a new building;
• To contract a mortgage;
• To invest in real estate;
• To settle the real estate aspects of a succession;
• To negotiate an adequate coverage of a property with an insurer;
• etc.

For their part, governments, municipalities, financial institutions and promoters from public or private sectors take decisions on a daily basis toward expenses or investments related to real estate.

Acting on our own account or as a corporate citizen, these decisions have to be based on criterias of great rationality.

Often, the stakes are sizable and a climate of crisis (divorce, estate planning, financial turmoil) could be prejudicial to an enlightened reflection. It is preferable to make sure of quality information which will motivate the most appropriate attitude in the circumstances.

The role of the Chartered Appraiser is to formulate a motivated opinion of the value of a real estate. In order to carry out a realistic judgment toward the value of a property the Chartered Appraiser uses a combination of three proven appraisal methods: Cost Approach, Direct Comparison Approach and Income Capitalization Approach.

The expertise of the Chartered Appraiser permits his client to take an enlightened decision when he wants to:

• Acquire, sale or transform a real estate;
• Construct, extend or renovate a building;
• Put his land in value;
• Rent a space located within a building;
• Establish the potential income of an income producing property;
• Negotiate a financing through a mortgage;
• Invest in securities based mainly on real estate;
• Transfer real estate assets in a fiscal restructuration;
• Negotiate or acquire a lease or another contract;
• Re-appraise real estate assets of a company or portfolio;
• Estimate the value of the real estate entering familial estate;
• Settle real estate aspects of a succession, a divorce or company dissolution;
• Make prepare an assessment roll for the allocation of the tax assessment;
• Verify the exactness and, if the case, appeal the assessment value of a property;
• Estimate the amount of indemnities in an expropriation process;
• Prepare a claim in relation with the value of a real estate involved in litigation;
• Estimate the insurable value of a building or negotiate a settlement after a sinister;
• Etc.

Although they work mainly in the field of real estate appraisal, many Chartered Appraisers can also carry out estimate of value of a business, of a company or moveable equipments. Certain Chartered Appraisers have acquired experience in specific fields like the agricultural or industrial domain, institutional, transports, etc.

The reasoning process of the Chartered Appraiser is founded on the examination of the market trends in order to derive objective conclusions. His mandate can comprise the following steps:

Definition of the mandate

• Definition of mandate;
• Identification of the required services and type of demanded report;
• Estimation of the fees and delays of production of the report.

Searches

• Visit of the property in order to verify the dimensions, the materials, the state of maintenance, the functional utility of the components and of the development plan and to take down the physical characteristics of the site. In the case of an income producing property: verify the leases, examine the rentable space, the rents and other rental conditions, the exploitation costs and any other contract in relation with the management, the maintenance;
• Study of the vicinity in order to observe the local market trends, the location of the subject property, the availability of the land ready to be build, the use of the properties, the availability of services and the level of price of the properties and rentals;
• Survey of the municipal regulations, of taxes and public services;
• Read property titles, consult the plans, and analyze the servitudes and other immoveable rights that could have an influence toward the utility and value of the property.

Analysis

• Analysis of optimum use of the land and building;
• Analysis of the effective age of the building and estimate of the remaining life cycle of the components;
• Detailed analysis of recent comparable property sales in the vicinity in order to measure by comparison, the probable value of the subject property taking into account its advantages and disadvantages;
• Recent ready to built land sales analysis in the vicinity;
• Analysis of income and expenses of the subject property and its comparables.

Estimation

• Analyze the replacement cost new of the building and et calculate the depreciation attributable to the deterioration, ageing, to the functional and economic obsolescence, cost estimate of the work that could be needed to correct the deterioration and the functional obsolescence and estimation of to probable cost to modify and renovate the building if necessary;
• Analyze the renting conditions and estimate the potential income obtainable from the renting of the property and services to the occupants, the probable vacancy rate, the exploitation costs and forecast of the net income;
• Analyze and estimate of the financing costs, the particular fiscal impacts and estimate the economic value by capitalization of the probable net return taking into account the return rates on real estate investments;
• Also, reconciliation of obtained results through the different appraisal methods in order to determine the most probable value of the property.

If needed, the Chartered Appraiser will take on the services of other professionals to make sure that his analysis takes into consideration all information having a particular impact on the use and the value of the property.

In the final analysis, the Chartered Appraiser will have to compare the obtained results throughout each of three approaches. His competence and his experience will permit to pass a judgement on the reliability, the pertinence and the contemporary characteristics of the obtained data.

He will then retain the market value as obtained throughout one or more approaches offering the highest degree of exactness with regards of the type of property and the aimed purpose of the appraisal.

Notwithstanding the amount obtained for market value, the report as given from the Chartered Appraiser to his client elaborates on the motives supporting the said conclusion with precisions for the set of elements substantially influencing the property value. The client disposes then of a motivated opinion with serious arguments. The Chartered Appraiser can also agree on with his client that the requested report be formulary type, containing a summary of the information necessary to estimate the value but still in respect the recognized norms of practice by the Order.

Article 23 of the Professional Code defines "the principal function of each order shall be to ensure the protection of the public. For this purpose it must in particular supervise the practice of the profession by its members."

A professional association represents and promotes the interests of its members.

It does not mean that Orders do not care for the interests of their members, however, approaches and priorities could somewhat diverge in view with their respective mandates.

Both types of organisms have often similar functions like continuing professional development, social activities, organisation of symposiums or congress, promoting the profession, public representations, etc.

The Professional Code governs the activities of 45 professionals orders, divided into two types of professions: the exclusive profession and the reserved profession.

In the first type: exclusive profession, only members of the order have the right to exercise the acts reserved to them as allowed by law and hold the title.

In the case of a reserved profession, even though members of such order are not entitled the exclusive right to accomplish their professional activities, the use of the title is limited to them only. In fact, the Ordre des Évaluateurs Agréés du Québec (www.oeaq.qc.ca) is an order with reserved title, which means that only the members of the Order can use Chartered Appraiser (Évaluateur Agréé), Chartered Assessor (Estimateur Agréé) or use the initials C.App.(É.A.). However, the real estate appraisal activities are not reserved to the only members of the Order.

Only the persons entered on the roll of the Ordre des Évaluateurs Agréés du Québec (www.oeaq.qc.ca) can declare to be members of the Order. This inscription is done once a year, on April 1^st of each year. Holding the Chartered Appraiser permit does not imply that one stays a member for life.

As a matter of fact, a person which was withdrawn from the roll for not paying his due, disciplinary sanction (even temporarily, in the course of the year), cannot declare to be member of the Order, use the title or initials reserved to members, nor let him be presented as such.

Furthermore, students and trainees, even entered on the roll of the Order cannot be declared as members unless they hold a valid permit and fulfill the other conditions to be entered on the roll (among others payment of the due and a proof of insurance coverage for professional liability).

The title is known as "Chartered Appraiser" with the abbreviations "C.App." which are also reserved by Article 36 j) of the Professional Code.

Preamble

Members of the Appraisal Institute of Canada (www.aicanada.ca) pledge to conduct themselves in a manner that is not detrimental to the public, the Institute, or the real property appraisal profession. Members’ relationships with other members and the Institute shall portray courtesy and good faith and show respect for the Institute and its procedures.

Rules

It is unethical for a member:

• to knowingly fail to comply with Bylaws, Regulations and Standards, and the Professional Liability Insurance Program, of the Institute;
• to knowingly engage in conduct that will prejudice his/her professional status, the reputation of the Institute, the appraisal profession, or any other member;
• to knowingly act in a manner that is misleading;
• to act in a manner that is fraudulent;
• to knowingly complete an assignment that a reasonable appraiser could not support;
• to claim qualifications, including Continuing Professional Development credits, improperly;
• to undertake an assignment lacking the necessary competence;
• to refuse to co-operate with the Institute;
• to not create a work file for each assignment;
• to disclose results of an assignment to anyone but the client, except with the client’s permission;
• to fail to reveal any conflict of interest;
• to accept an appraisal assignment that is contingent on the result.