Book 3 - Appraisal Institute of Canada

Mp r e s i d e n t ’ sessageLifelong learningprepares presidentfor ever-changingenvironmentGordon J. Tomiuk, AACI, P. AppAIC PresidentQYou currently own and operateyour own real estate appraisalfirm. How long have you beendoing this and how did it come about?AIn 1988, I established my owncompany. Rob Grycko joined thefirm in 1989 as a Candidate andbecame a partner in 1993. Since thattime, our business has grown considerablyand, three years ago, we took ona third partner. Our company of TomiukGrycko Krueger now consists of twoAACIs, one CRA and two part-time supportstaff. We are heavily involved inwhat you would describe as the high-endresidential market, which keeps our firmextremely busy. As the senior partner, Ido take on some commercial projects.QWhat was your background priorto opening your own company?AIn 1976, I began working with theCity of Winnipeg Land Surveys andReal Estate Department on one ofits surveying crews. When an opportunitycame in 1979 to become an appraisertrainee with the Land Survey and RealEstate Department, I pursued the opportunity.I obtained my CRA designationin 1983 and, shortly thereafter, took aposition with a real estate brokerage,where I helped establish an appraisaldivision. I subsequently managed thatdivision for the last year I was with them.In 1988, I earned my AACI designationand decided that the time was right tostrike out on my own.QWas achieving your AACIdesignation the catalyst tostarting your own company?AI have always believed in puttingeverything I have into whatever Ido. Being in business for yourselfcertainly gives you the opportunity andthe incentive to do that, so I think followingmy entrepreneurial spirit wouldhave been in the cards for me regardless.However, my AACI designationcertainly expanded my horizons. It gaveme the breadth and depth of knowledgeand training to see the bigger picture,to provide more detailed reports and toget involved in more complex projects.Even though our company’s main focus isresidential, my AACI training adds to thediversified services we can provide.QYou are now the presidentof the Appraisal Institute ofCanada (AIC). When did you firstbecome involved as a volunteer inthe profession?AFrom 1988 to 1999, I was busybuilding a practice. However, I wasalways interested in our professionand the direction that it was taking.Feeling that the Institute was becomingmore proactive, and with the supportof my partners, I decided that the timewas right in ’99 to get involved withthe local association. While on theManitoba Council, I served on both thePublic Awareness Committee and theAdmissions Committee. I also servedas our link to allied organizations withinthe province, such as The Winnipeg RealEstate Board (WREB). There, I participatedon committees dealing with importantissues such as legislation and technology.While I was President of the AIC’sC a n a d i a nAppraiserVolume 51 • book 3 • 2007EvaluateurC a n a d i e n

You have to continually improve the services you are capableof providing. That means following a course of action thatincludes continuing education, mentoring, adhering tostandards, welcoming peer reviews…the list goes on.Provincial Association in 2001/02,one of our most significant projectswas developing a property/sales database for members in Winnipeg. Thiswas eventually sold to the WREB,but with appraisal representation onthe overseeing committee.QFrom there it was onto thenational scene. What is thehistory of your involvementat that level?AThe AIC encourages provincialpresidents to sit in on itsBoard meetings and observethe proceedings. That experiencecertainly gave me some insight intothe workings of our national bodyand whetted my appetite to participateon a national level. In 2003/04,I was on the Board of Directors and,in my first year, served as Board liaisonto the Communications Committee.That was an extremely busy yearfor all of our volunteers and staffbecause of the vast amounts of workbeing done relative to the brandingissue, but it was an excellent wayto gain a broader perspective on allaspects of the Institute and where itwas headed. In 2004/05 and againin 2005/06, I was elected by theBoard to serve as Vice-President.That was followed by President Electin 2006/07 and President this year.QWhat has that journey beenlike in terms of challenges,sacrifices and rewards?ADefinitely, there has been asignificant sacrifice in termsof time away from home andbusiness. Fortunately, I have alwayshad tremendous support from mywife, family and business partners.Finding the time for such a commitmenthad been one of my biggestconcerns. Now, I ask myself whyI waited so long. The rewards faroutweigh the sacrifices. You cannotput a price tag on the relationshipsestablished with members and staffacross the country as well as thenetworking opportunities that presentthemselves. By meeting people,listening to what they have to sayand talking with them, you cannothelp but broaden your horizons. Itmakes you a better appraiser anda better member. In this regard, ithas been gratifying to see the shiftin thinking that has been going onrelative to volunteering. Youngermembers are seeing the value totheir careers and are volunteering atevery level. We just need to encouragemore of them to do so.As for challenges, I would haveto say the biggest has been dealingwith change and convincing membersof the need for it. The amountof change that this organization hasgone through in recent years comparedto other professional organizationshas been truly remarkable. Wehave had to catch up on technology,how our profession is perceived inthe marketplace, and our ability todeliver the services that the marketplaceis demanding. I believe thatwe are now ahead of the curve in allof these areas, but we must workharder than ever before to continueevolving our profession.QIs continually strivingto improve one of yourbusiness philosophies?AIn today’s highly competitivemarket, you are only as goodas your last report…and thatreport has to be of the highest qualitypossible and, more often thannot, it has to be turned around inthe shortest time possible. In orderto do that, you have to continuallyimprove the services you are capableof providing. That means, on aconsistent and ongoing basis, followinga course of action that includescontinuing education, mentoring,adhering to standards, welcomingpeer reviews…the list goes on.QWhat role has mentoringplayed in your career?AIt has played a huge role…and it continues to do so.Over the years, I have hadmany mentors who offered counseland guided me along the way,including some I still look to foradvice. Within our own company,I continuously mentor my partnersand they do likewise with me. I amcomfortable having these individualsreview my reports before they arepresented to clients, particularly iflitigation is involved.Even at the Board level, we areexploring ways of orienting boardmembers. We have five new directorson this year’s Board, which isan unprecedented number, and weneed to make sure that they areoriented and prepared for the challengesthey will face. We all havea role to play in this process. Ourmembers are leaders in the professionand we appreciate the contributionof their valuable knowledge andexpertise in providing direction to theappraisal profession.QWhat are some of thecurrent initiatives thatyou and the Board will beworking on during the year ahead?AWell, I am very excited thatour new marketing plan isabout to be rolled out duringmy term. After requesting proposalsfrom numerous marketing agencies,we have now narrowed it down toC a n a d i a nAppraiserVolume 51 • book 3 • 2007EvaluateurC a n a d i e n

three finalists and will then selectone company that will becomeour Agency of Record working withus to make the marketing plan areality. Our goal is to introducethe plan to members first, so thatthey will be well versed on what istaking place, and, then, sometimeearly in 2008, it will be launchedto employers, the general public,stakeholders and universitiesacross the country. It has been saidthat “we were real estate’s bestkept secret,” but that is about tochange. For a modest per memberannual investment of $65, recognitionof our brand and the servicesthat we are capable of providing willbe enhanced nation-wide.In the area of service delivery,we have established a MemberServices Task Force to reviewthe services that we deliver toour members, in order to ensurethat they meet their needs, areof high quality and that they aredelivered consistently to all membersacross the country. Our RealEstate Fraud Task Force is workingto inform members, their clientsand, in some cases, the public,on what we can do to help detectand prevent real estate fraud.Our professional practice processcontinues to be enhanced with thefocus on standards-based competencyand public protection. Inthis respect, we are looking intoand investigating a peer reviewsystem that will help to elevatethe level at which our profession isviewed. As well, we are looking intonew service opportunities such asenergy audits and machinery andequipment valuation that we canprovide to the public, and workingwith our education partners toensure that we have the skill setsto make the most of these opportunities.In essence, we are workingto enhance the marketability ofour members.It is absolutely critical that we donot over promise and then underdeliver, so it is incumbent on allof us to follow through on theseinitiatives and do our part to ensuresuccess at a time when competitionis greater than it has ever beenbefore. There is a role to play formembers, chapters and provincialassociations alike. Each and everyone of us must see ourselves asmembers of a profession with veryhigh expectations. When we arerepresenting ourselves, we are alsorepresenting the entire profession.We have a vision, a mission and astrategic plan that will provide usthe guidance required for our professionto continue to grow. If wework collaboratively and stay thecourse, we will secure our positioningas the pre-eminent real estatevaluation professionals and we willsucceed in achieving our objectives.QHow should designatedmembers, Candidatesand Students viewthese developments?AI would hope that they viewthem in a very positive light.AIC designations are beingstrengthened through our more stringentadmission requirements includinguniversity education. We are attractingcandidates from business schools thatare now looking at our profession asan attractive career alternative. We arelooking into establishing a CandidateAdvisory Committee to ensure that weare meeting their requirements andexpectations. This is all being donewith the objective of enhancing ourposition as a professional organizationand making the profession moreattractive to potential new entrants.QHow do you envision your roleas President of the AIC overthe next year?AI see my role as an ambassador,a negotiator and a mediator.I will be working with theBoard of Directors to help advance ourStrategic Plan. With allied organizationsin Canada and around the world,I will be representing and acting onbehalf of both the AIC and the profession.In this regard, AIC plays a keyrole internationally and we are seenas progressive leaders in the profession.I will be doing everything possibleto maintain and enhance thatposition. Finally, I will be working atstrengthening our provincial relationshipsby attending provincial AGMsand by strengthening relationships withprovincial presidents through regularmeetings via teleconference and inperson. It should be quite a year.QDo you have any final words toshare with members?AThese are exciting times to bepart of the Appraisal Instituteof Canada. As the AIC strives tobe better at what it does, I encourageevery member to raise his or her ownbar and consider the ways they candevelop their careers. Whatever we aredoing today, we should be able to doeven better tomorrow. Learning shouldbe a lifelong philosophy.C a n a d i a nAppraiserVolume 51 • book 3 • 2007EvaluateurC a n a d i e n

essageMdu présidentL’apprentissage continuprépare le présidentà un contexte enconstante évolutionGordon J. Tomiuk, AACI, P. AppPrésident de l’ICEQVous appartenez et exploitezactuellement votre proprecabinet d’évaluationimmobilière. Depuis combien de tempsle faites-vous et qu’est-ce qui vous amotivé à prendre cette décision?REn 1988, j’ai fondé ma proprecompagnie. Rob Grycko s’estjoint à moi en 1989 comme stagiaireet est devenu associé en 1993.Depuis, notre entreprise a pris beaucoupd’expansion et, il y a trois ans,nous avons accepté un troisième associé.Le cabinet Tomiuk Grycko Kruegercompte maintenant deux AACI, un CRAet deux employés de soutien à tempspartiel. Nous travaillons en grandepartie sur le marché résidentiel de luxe,ce qui nous tient très occupés. Commeassocié principal, j’accepte aussi certainsprojets commerciaux.QQuels étaient vos antécédentsavant de fonder votrepropre compagnie?REn 1976, j’ai commencé à travaillerpour le compte du servicedes levés et de l’immobilier de laVille de Winnipeg. Je faisais alors partiede l’équipe responsable d’effectuer leslevés. Lorsque l’occasion s’est présentéeen 1979 de devenir évaluateur enformation au sein du même service,j’ai accepté. J’ai obtenu ma désignationCRA en 1983 et accepté par la suite unposte auprès d’une maison de courtageimmobilier où j’ai aidé à créer une divisionspécialisée en évaluation. Durantma dernière année avec cet employeur,j’ai dirigé la division d’évaluation.En 1988, j’ai obtenu ma désignationcomme AACI et décidé que le momentétait venu de me lancer à mon compte.QL’obtention de votre désignationAACI a-t-elle joué un rôle dansvotre décision de vous lancer àvotre compte?RJ’ai toujours été d’avis que jedevais investir ce que j’ai dansce que je fais. Travailler à soncompte nous donne certes l’occasion etle désir pour ce faire alors je crois quel’esprit d’entrepreneurship était présentpeu importe. Toutefois, la désignationAACI m’a permis d’élargir mes horizons.Elle m’a donné la portée et la profondeurdes connaissances et la formationnécessaires pour voir l’ensemble de lasituation, préparer des rapports plusdétaillés et participer à des projets pluscomplexes. Bien que le point de mireprincipal de notre cabinet soit le secteurrésidentiel, ma formation comme AACIaccroît la gamme de services diversifiésque nous sommes en mesure d’offrir.QVous êtes maintenant leprésident de l’Institut canadiendes évaluateurs (ICE). Quandavez-vous commencé à participercomme bénévole au sein dela profession?RDe 1988 à 1999, j’étais occupéà parfaire ma pratique. Toutefois,la profession et son orientationont toujours retenu mon attention.Voyant que l’Institut devenait plus proactifet avec le soutien de mes associés,j’ai décidé, en 1999, de participer activementau sein de mon association locale.Durant mon service auprès du Conseil duManitoba, j’ai siégé au Comité sur la sensibilisationpublique et au Comité sur lesadmissions. J’ai aussi servi de personneressourceauprès d’organismes connexesà l’échelle provinciale comme le Win-C a n a d i a nAppraiserVolume 51 • book 3 • 2007EvaluateurC a n a d i e n

nipeg Real Estate Board (WREB) oùj’ai participé à des comités traitantde questions importantes telles laloi et la technologie. Lorsque j’étaisprésident de l’Association provincialede l’ICE en 2001-2002, l’un des projetsles plus importants fut la créationd’une base de données sur lesventes et les propriétés à l’intentiondes membres de la région de Winnipeg.Cette base de données futéventuellement vendue au WREB,mais moyennant une représentationdu secteur de l’évaluation au sein duComité de surveillance.QCette participation futvotre tremplin à la scènenationale. Qu’avez-vous faità ce niveau?RL’ICE encourage les présidentsprovinciaux à siégeraux réunions de son Conseilet à observer les débats. Cetteexpérience m’a certes donné unebonne idée du fonctionnementde l’organisme national et m’aincité à participer plus activementau national. En 2003-2004, j’aisiégé au Conseil d’administrationet durant ma première année, j’aiassuré la liaison entre ce dernier etle Comité des communications. Cefut une année très occupée pourtous nos bénévoles et membres dupersonnel étant donné la quantitéde travail entourant la question dupositionnement. Par ailleurs, cela apermis d’élargir notre façon de voirtoutes les facettes de l’Institut etson orientation. En 2004-2005 etencore en 2005-2006, j’ai occupéla vice-présidence du Conseil avantd’être président élu en 2006-2007et président cette année.QQue représentait cetteexpérience en termesde défis, sacrificeset récompenses?RDéfinitivement d’importantssacrifices en ce sens que j’aipassé beaucoup de tempsloin de la maison et de mon entreprise.Heureusement, mon épouse,ma famille et mes associés m’onttoujours appuyé. Trouver le tempsnécessaire pour un tel engagementm’a toujours inquiété. Maintenant, jeme demande pourquoi j’ai attendu si10C a n a d i a nAppraiserVolume 51 • book 3 • 2007EvaluateurC a n a d i e nlongtemps. Les récompenses dépassentde beaucoup les sacrifices. Onne peut rattacher une valeur auxrapports établis avec les membreset le personnel à l’échelle du pays,ni aux occasions de réseautagequi se présente. En rencontrant lesgens, en les écoutant et en discutantavec eux, on ne peut faireautrement qu’élargir nos horizons.On devient un meilleur évaluateur etun meilleur membre. À ce chapitre,disons qu’il est réconfortant de voirle changement d’attitude face aubénévolat. Les membres plus jeunesvoient les bienfaits du bénévolatpour leur carrière et participentà tous les niveaux. Il suffit d’enencourager un plus grand nombre àfaire de même.Il faut sans cesseaméliorer lesservices que l’onoffre. Cela signifiequ’il faut, sur unebase continue etcohérente, adopterdes mesures quiincluent l’éducationpermanente,le mentorat,l’application desnormes, la révisionpar des pairs etainsi de suite.En ce qui concerne les défis, jecrois que le plus important fut celuidu changement et de convaincreles membres de sa nécessité. Lenombre de changements au seinde cet organisme au cours desdernières années par rapport àd’autres organismes professionnelsest vraiment remarquable. Nousavons déployé tous les efforts pouradopter les plus récentes technologies,pour déterminer la perceptionde notre profession sur le marchéet améliorer notre capacité enmatière de prestation des servicesque demande le marché. Je croisque nous sommes maintenant àjour à chacun de ces paliers maisque nous devons travailler avecacharnement plus que jamais dansla poursuite de l’avancement denotre profession.QL’amélioration continuefait-elle partie de votreconception des affaires?RSur le marché hautementconcurrentiel d’aujourd’hui,notre réputation est fondéesur notre dernier rapport et celui-cidoit être de la plus haute qualitépossible et produit dans le meilleurdélai possible. À cette fin, il fautsans cesse améliorer les servicesque l’on offre. Cela signifie qu’ilfaut, sur une base continue etcohérente, adopter des mesuresqui incluent l’éducation permanente,le mentorat, l’application desnormes, la révision par des pairs etainsi de suite.QQuel rôle le mentorat a-t-iljoué dans votre carrière?RLe mentorat a joué un rôletrès important et il continued’en être ainsi. Au fildes ans, plusieurs mentors m’ontconseillé et guidé dont plusieursque je consulte toujours. Au seinde notre entreprise, je suis lementor de mes associés et ceux-ciagissent comme le mien. Je suisà l’aise avec le fait qu’ils revoientmes rapports avant qu’ils soientprésentés aux clients, en particuliers’il y a litige.Même au niveau du Conseil,nous cherchons sans cesse desfaçons de guider les membres duConseil. Cette année, le Conseilcompte cinq nouveaux membres,une situation sans précédent, etnous devons nous assurer qu’ilssuivent une orientation et qu’ilssoient prêts aux défis qu’ils aurontà relever. Nous avons tous un rôle

à jouer dans ce processus. Nosmembres sont les leaders de laprofession et nous apprécions lacontribution de leurs précieusesconnaissances et compétencesau niveau de l’orientation dela profession.QQuelles sont quelquesunesdes initiatives surlesquelles vous et leConseil travaillerez au cours del’année à venir?RDisons que je suis emballédu fait que notre nouveauplan de marketing sera misen oeuvre dans le cours de monmandat. Après avoir sollicité uneproposition de plusieurs agencesde marketing, nous avons retenutrois finalistes et choisiront cellequi travaillera avec nous pourdonner vie au plan. Nous prévoyonsd’abord présenter le plan auxmembres de sorte qu’ils soientbien au courant de l’actualité et,en 2008, nous le présenteronsaux employeurs, au grand public,intervenants et universités àl’échelle du pays. Certains ont ditque nous « étions le secret biengardé de l’immobilier » mais leschoses vont bientôt changer. Moyennantun investissement annuelmodeste de 65 $ par membre, lareconnaissance de notre marqueet des services que nous sommesen mesure d’offrir sera rehausséeà l’échelle du pays.En ce qui touche la prestationde services, nous avons créé unGroupe de travail sur les servicesaux membres qui examinera lesservices offerts afin d’assurerqu’ils répondent à leurs besoins,qu’ils soient de la plus hautequalité possible et qu’ils sontdispensés de façon cohérente àtous les membres à l’échelle dupays. Notre Groupe de travail surla fraude immobilière s’affaire àrenseigner les membres, leursclients et, dans certains cas,le public au sujet de ce quenous sommes en mesure defaire pour aider à déceler et àprévenir la fraude immobilière.Notre processus de pratiqueprofessionnelle continue des’améliorer avec concentrationsur des compétences fondéessur les normes et la protectiondu public. À ce chapitre, noussommes à examiner un systèmed’examen par les pairs quiaidera à rehausser notre imageauprès du public. Également,nous nous penchons sur lesnouveaux services que nouspouvons offrir au public tels desvérifications en matière d’énergieet l’évaluation de la machinerieet de l’équipement, en plus detravailler avec nos partenaires enéducation pour nous assurer qu’ilsont les compétences requisespour profiter au maximum deces occasions. En fait, noustravaillons à améliorer la qualitémarchande de nos membres.Il est absolument essentiel dene pas faire de promesses quenous ne pouvons tenir ou encore,de ne pas être à la hauteur. Ilrelève donc de chacun de nousde donner suite à ces initiativeset de faire notre part pour assurerleur succès à un moment où laconcurrence est plus élevée quejamais. Tous les membres, chapitreset associations provincialesont un rôle à jouer. Chacun denous doit se considérer commefaisant partie d’une profession ausein de laquelle les attentes sonttrès élevées. Lorsque nous nousprésentons, nous représentonsl’ensemble de la profession. Nousavons une vision, une mission etun plan stratégique qui servirontà guider la profession à mesurequ’elle continue de croître. Sinous travaillons en collaborationet que nous maintenons le cap,nous parviendrons à nous positionnercomme professionnels depremier choix dans le domaine del’évaluation immobilière et réussironsà atteindre nos objectifs.QComment les membresagréés, stagiaires etétudiants voient-ilsces progrès?RJ’espère qu’ils les considèrentfavorablement.Les désignations de l’ICEsont raffermies par des exigencesencore plus strictes à l’admission,y compris une formation universitaire.Nous retenons l’attention destagiaires venant d’écoles commercialeset qui considèrent notreprofession comme un choix decarrière attrayant. Nous pensons àformer un Comité consultatif desstagiaires afin d’assurer que nousrépondons à leurs besoins et àleurs attentes, l’objectif étant derehausser notre position commeorganisme professionnel et derendre la profession encore plusintéressante pour les nouveauxmembres potentiels.QComment voyez-vous votrerôle à titre de présidentde l’ICE au cours de laprochaine année?RJe le vois comme étantcelui d’un ambassadeur,d’un négociateur et d’unmédiateur. Je travaillerai avecle Conseil d’administration pourfaciliter l’avancement de notreplan stratégique. En collaborationavec nos alliés du Canada etde par le monde, je représenteraiet j’agirai au nom de l’ICE et dela profession. À ce niveau, l’ICEjoue un rôle important à l’échelleinternationale et nous sommesconsidérés comme des leadersprogressistes au sein de la profession.Je ferai tout mon possiblepour maintenir et raffermir cetteposition. Enfin, je tenterai desolidifier nos rapports provinciauxen assistant aux AGA provincialeset en améliorant les relations avecles présidents provinciaux par latenue de réunions régulières entête-à-tête et via téléconférence.L’année en sera toute une!QAvez-vous quelquesderniers mots à partageravec les membres?RC’est un moment excitantpour faire partie del’Institut canadien desévaluateurs. À mesure que l’ICEs’efforce d’améliorer ce qu’elle fait,j’encourage tous les membres àhausser la barre et à considérercomment ils peuvent donner del’expansion à leurs carrières. Peuimporte ce que nous accomplissonsaujourd’hui, nous devrionspouvoir faire mieux demain. Il nefait nul doute que l’apprentissagedoit être continu.C a n a d i a nAppraiserE CVolume 51 • book 3 • 2007 valuateura n a d i e n 11

RC E OeportBuilding capacityGeorges Lozano, MPAAIC Chief Executive Officerdefinition of the wordseffective and efficient goessomething like this: effectiveis ‘doing the right things,’while being efficient is ‘doing thingsright.’ Professional associations like theAppraisal Institute of Canada (AIC) needto focus on doing the right things anddoing them the right way. As simple asthis may sound, it requires considerableinsight as well as strong leadership andmanagement skills to achieve. In short,it requires a strong organization withthe capacity to develop and implementplans, policies and programs that effectivelyand efficiently meet the needs ofits members.To paraphrase a recent AmericanPresident, “it’s about the members,stupid.” Today, strong and thriving associationsfocus on relevance and not onloyalty, as they might have in the past.Members rightfully expect from theirassociation services that are meaningfuland that support them in the developmentand growth of their business andthe furtherance of their careers.What makes an association strong?There are many factors that contributeto the strength of an association, includingits ability to address member needsin a timely manner, to provide effectiveleadership and representation at thelocal, regional, national, and internationallevels, and to manage its affairs ina cost-effective manner.As the word implies, an associationis a coming together of members, volunteersand staff, all working in concerttowards the achievement of mutuallyagreed upon objectives. The lifeblood ofall associations is the membership. It isfrom the membership that the leadershipof the association is derived and,through those volunteers, the association’sdirection, policies and programstake shape. Members elect the leadershipof their association from amongthemselves. Through this process, theydelegate authority to these electedindividuals and they entrust them withthe management of the association.Members continue to play an importantrole by providing management withinput and feedback on proposed policiesand programs. However, they respectthe decisions taken by managementand they give their elected officials theappropriate latitude needed to run theassociation effectively and efficiently.As a professional, member‐drivenassociation, the AIC operates in thisfashion, and its success dependsentirely upon the synergies derived fromthe interplay among the members, thevolunteers, and the staff at the national,provincial and chapter levels. Workingtogether, we can build a strong, effectiveand efficient association that is relevantto our members and highly respected inthe community.The process of developing a strongand relevant organization is oftenreferred to as capacity building, and itis defined as the ability of non-profitorganizations to fulfill their missions inan effective manner. Building capacitywithin a professional association suchas the Institute requires that all involvedhave a clear understanding of theirroles and that they work in a collaborativemanner.Capacity building begins with a strategicplan. Because of the diversity ofthe Institute’s membership, developingsuch a plan can be a challenge. Indeveloping its new Strategic Plan, theAIC Board of Directors consulted withthe provincial associations and receivedinput from the membership at large. The12C a n a d i a nAppraiserVolume 51 • book 3 • 2007EvaluateurC a n a d i e n

apportRd u c h e fde la directionLe renforcementdes capacitésGeorges Lozano, MPAChef de la direction de l’ICEn pourrait définir les mots« efficace » et « efficient »comme suit : efficace signifie« faire les bonnes choses » alors que efficientsignifie « faire les choses correctement». Les associations professionnellescomme l’Institut doivent concentrer surl’accomplissement des bonnes choses etle faire ensuite correctement. En dépit dela simplicité apparente de ces définitions,il est nécessaire, pour parvenir à cette fin,de posséder de bonnes connaissanceset d’excellentes aptitudes en matièrede leadership et de gestion. En bref,l’organisme doit être solide et doté de lacapacité d’élaborer et de mettre ne œuvredes plans, des politiques et des programmesqui répondent de façon efficaceet efficiente aux besoins de ses membres.Pour citer un récent Président américain« Idiot…tout est au sujet des membres!»De nos jours, les associationssolides et prospères concentrent sur lapertinence et non sur la loyauté commec’était le cas dans le passé. Avec raison,les membres s’attendent de recevoir deleur association des services pertinents etle soutien dont ils ont besoin pour l’expansionet la croissance de leurs entrepriseset l’avancement de leurs carrières.Qu’est-ce qui contribue à la soliditéd’une association? Plusieurs facteurscontribuent à la solidité d’une association,dont l’aptitude à répondre aux besoins deses membres de façon opportune, offrirun leadership et une représentation efficaceaux paliers local, régional, nationalet international, et gérer ses affaires d’unefaçon efficace par rapport aux coûts.Comme le mot le sous-entend, uneassociation est un regroupement demembres, de bénévoles et de personnelqui travaillent et qui s’efforcent d’atteindredes objectifs mutuellement convenus.La force de toute association réside auniveau de ses membres. C’est à mêmeles membres que le leadership d’uneassociation est assuré et que son orientation,ses politiques et ses programmesprennent forme. Les membres élisentla direction de leur association entreeux. Grâce à ce processus, ils délèguentl’autorité à ces représentants élus à qui ilsconfient également la direction de l’association.Les membres continuent de jouerun rôle important en offrant à la directiondes commentaires sur les politiques etles programmes proposés. Toutefois, ilsrespectent les décisions de la directionet lui donne la liberté nécessaire pourdiriger l’association de façon efficace etefficiente.À titre d’association professionnelleaxée sur ses membres, c’est ainsi queprocède l’Institut canadien des évaluateurset son succès dépend entièrementde la synergie dérivée de l’interactionentre les membres, les bénévoles et lepersonnel des paliers national, provincialet des chapitres. Ensemble, noussommes en mesure de bâtir une associationefficace, efficiente, pertinente pourses membres et qui est hautement respectéepar le grand public.Le processus d’élaborer un organismesolide et pertinent est souvent appelé« renforcement des capacités » etest défini comme étant l’aptituded’un organisme à but non lucratif des’acquitter efficacement de sa mission.Le renforcement des capacités au seind’une association professionnelle commel’Institut requiert que tous les intervenantscomprennent clairement leurs rôles etqu’ils travaillent en collaboration.Le renforcement des capacités commenceavec un plan stratégique. Étantdonné la diversité des membres de l’Institut,l’élaboration d’un tel plan peut constituerun défi de taille. Dans l’élaborationdu nouveau plan stratégique, le Conseild’administration de l’ICE a consulté lesassociations provinciales et tenu comptedes nombreux commentaires reçus desmembres en général. Il en a résulté unplan reflétant une vision à grande portée,une mission et des objectifs qui répondentaux besoins actuels et futurs de tous14C a n a d i a nAppraiserVolume 51 • book 3 • 2007EvaluateurC a n a d i e n

les membres. Bien qu’il s’agisse d’unplan sur plusieurs années, le documentn’est pas rigide. Au contraire,il est évolutif et doit être considérécomme une carte routière qui doitêtre examinée et possiblement modifiéede temps à autre.Le renforcement des capacitéssous-entend également la créationd’un leadership solide et efficace. Celeadership est assuré à même plusieurssources, y compris les bénévolesqui oeuvrent au sein du Conseild’administration et des comités etdes membres professionnels dupersonnel qui appuient les bénévolesen appliquant des programmes et engérant les activités quotidiennes del’organisme. Le leadership de touteassociation est étroitement lié à savision et à sa mission. Les dirigeantsdoivent partager cette vision et,plus important encore, doivent êtresérieusement engagés à l’endroit desobjectifs de l’association et disposésà déployer tous les efforts pour lesatteindre. Les bénévoles de l’Institut,qu’il s’agisse de membres du Conseild’administration, d’administrateursprovinciaux ou de membres de comités,sont des ambassadeurs qui doiventarticuler la vision et la missionde l’Institut et améliorer l’image de laprofession d’évaluateur et des membresde l’ICE qui sont à son service.En bref, les leaders efficaces renforcentla capacité de l’organisme enaméliorant son image, son prestigeet sa réputation au sein de la collectivitéet en établissant des partenariats,des liens de collaboration etd’autres relations de travail pour faireavancer les buts de l’organisme.Afin de renforcer la capacité auniveau de notre leadership, il estimportant de fournir aux dirigeantsactuels l’information et les ressourcesappropriées pour accomplir letravail qui les attend. Aussi, il estimportant de former les nouveauxdirigeants. L’identification et la formationde ces nouveaux dirigeantsaidera à assurer la durabilité et laviabilité de l’organisme. À ce niveau,les membres ont un rôle importantà jouer en identifiant et en encourageantles nouveaux leaders potentielsqui ont de nouvelles idées etqui sont disposés à collaborer dansl’atteinte des buts et objectifs.Il est essentiel d’avoir les ressourcesappropriées pour bâtir uneassociation solide qui peut offrir auxmembres les services qu’ils méritentet dont ils ont besoin. Ces ressourcespeuvent prendre diverses formes,y compris financières et humaines.Ces ressources sont rares et doiventêtre bien gérées. Il faut accorder uneattention particulière à l’éliminationdes inefficacités et des redondancesvia une coopération attentive. Latechnologie informatique doit êtreutilisée pleinement pour gérer lesprogrammes et l’échange d’informationavec les membres et au delà.Lorsque possible, les économiesd’échelle doivent servir à optimiser lesressources existantes et à offrir unevaleur encore plus élevée contre lescotisations que versent les membres.Nous devons continuerà suivre la voie tracéepar les membres etsuivre l’orientationdes leaders qu’ils ontchoisis et celle desconseils et des comitésqu’ils servent.Un troisième élément tout aussiimportant du renforcement descapacités et qui contribue à la soliditédes associations est l’aptitudede communiquer avec les membreset les intervenants. Même si uneassociation a un plan, les ressourcessuffisantes et une bonne direction,son impact peut être limité si elle n’apas une visibilité et une reconnaissanceadéquates. Ainsi, les activitésde diffusion sont essentielles aurenforcement des capacités incluantla communication et le marketing, lareprésentation, le réseautage et lacréation d’alliances stratégiques avecdes partenaires aux vues similaires.Le nouveau plan de marketing et decommunication de l’Institut qui seraprésenté au début de l’an prochaincontribuera largement à l’améliorationdu profil de l’Institut et de ses membreset à accroître la sensibilisationau rôle des membres de l’Institut età la vaste gamme de services qu’ilssont en mesure d’offrir. En plus de lamise en œuvre du plan de marketinget de communication, il sera importantpour l’ICE et les associationsprovinciales de collaborer étroitementpour rehausser leurs activitésde représentation auprès dessecteurs public et privé des paliersrégional, national et international.Le réseautage est particulièrementimportant au sein des membres del’ICE mais également entre ceux-ci etd’autres professionnels. À ce niveau,les associations provinciales et leurschapitres peuvent également jouerun rôle important.Par tradition, les services auxmembres ont servi à déterminer lerendement des associations. Toutefois,un signe de solidité d’uneassociation n’est pas nécessairementla quantité de services qu’elleoffre mais plutôt leur qualité et leurutilité. Les tendances récentes dansle monde des associations visent àmesurer les services aux membresen fonction de leurs résultats plutôtque de leur prestation. Ainsi, si unservice particulier donne lieu à desrésultats positifs pour les membreset la profession, il est considérécomme étant de valeur élevée. Unexemple est le perfectionnementprofessionnel qui permet aux membresd’accroître leurs aptitudes àélargir la portée de leurs services oud’améliorer l’exécution d’un serviceprofessionnel.Afin de renforcer au maximum lacapacité de notre association, nousdevons continuer à suivre la voietracée par les membres et suivrel’orientation des leaders qu’ils ontchoisis et celle des conseils et descomités qu’ils servent au nationalet au provincial. En leur faisantconfiance ainsi qu’au personnelprofessionnel qui gère les activitésquotidiennes des associations, nouspourrons concentrer nos effortssur la recherche et l’élaboration defaçons de réaliser, en collaboration,des programmes et servicesefficaces et efficients en réponse auxbesoins des membres et rehausserleur image du même coup. Parailleurs, cette attitude donnera lieu àl’avancement de la profession et aurenforcement de notre associationprofessionnelle à l’avantage desmembres de l’ICE et du public quifait appel à leurs services.C a n a d i a nAppraiserE CVolume 51 • book 3 • 2007 valuateura n a d i e n 15

I N S U R A N C E N E W S A N D V I E W SFirst ProfessionalL i a b i l i t y I n s u r a n c e C o m pa n yToday, Mark R. Frederick (aided by Mathew Bujar) of Miller Thomson LLPand Denis Rivard of SCM Adjusters write on the issue of trespass. Trespassis a quasi-criminal offence for which one can be prosecuted civillyand/or it creates a right of action against an appraiser who wrongly entersupon the land of another. There are exceptions, and appraisers who are indoubt should consult their solicitor before making mistakes that could costthem not only in terms of legal damages, but in terms of injury to themselvesor others.Brian DuncanAACI, P. App,Chairman of the Board,FPLICForgive us our trespassesBy Mark R. Frederick, LL.B, and Mathew Bujarur article begins with anexcerpt from the law ofOntario, which is similarto law in other EnglishCanadian provinces:Ontario StatutoryTrespass ProvisionsThe relevant statute under which anappraiser may be found liable fortrespass is the Trespass to PropertyAct, R.S.O. 1990, most recentlyamended in 2000. An appraisermay be found liable of trespassingunder section 2(1) of this Act,and a statutory defence to this tortis found under section 2(2) of thisAct. The relevant provisions readas follows:Trespass an offence2. (1) Every person who is notacting under a right or authorityconferred by law and who,(a) without the express permissionof the occupier, the proofof which rests on the defendant,(i) enters on premises whenentry is prohibited underthis Act, or16C a n a d i a nAppraiserVolume 51 • book 3 • 2007EvaluateurC a n a d i e n(ii) engages in an activity onpremises when the activityis prohibited under thisAct; or(b) does not leave the premisesimmediately after he or sheis directed to do so by theoccupier of the premises or aperson authorized by the occupier,is guilty of an offence andon conviction is liable to a fineof not more than $2,000. R.S.O. 1990, c. T.21, s. 2 (1).Colour of rightas a defence(2) It is a defence to a charge undersubsection (1) in respect of premisesthat is land that the personcharged reasonably believed thathe or she had title to or an interestin the land that entitled him or herto do the act complained of, R.S.O.1990, c. T.21, s. 2 (2).Say that you want to inspect aproperty, yet you do not fully haveinstructions to do so. Absent somecolour of right that gave you anability to enter onto that land, it isunlikely that you, as an appraiserwithout a mandate from the owner,would be able to establish a colorof right defence, as you would lackreasonable belief that you hadentitlement. Instructions from amortgagee who does not own theproperty or who has asserted noclaim against the land in questionprovides no right at all, even if themortgage is in default.You must be certain who yourinstructions came from andalways have the permission ofthe owner to enter onto his orher land.Common lawtrespass to landThe courts have found that trespassto land requires a directinterference with land possessedby the plaintiff, and that enteringon land without permissionconstitutes a trespass: TownsviewProperties Ltd. v. Sun Construction& Equipment Co. [1974] O.J.No. 2260. Further, to successfullyargue a trespass claim, the plaintiffmust establish that the conduct ofthe defendant caused more than a

minimal amount of damage, however,where damages are minimal,an injunction, may be sought:Mulholland v. Barlow [1914]O.J. No. 600.Common law defencesto trespass to landIn Fridman, The Law of Torts inCanada (2 nd ) (Toronto: Carswell,2002), the defences of no intentto trespass, necessity, justification,legality under statute, entry bypolice, entry as of right, andconsent are outlined as possibledefences to a trespass action. Ofthese defences, only the latterwould likely be applied to, andconsequently, be considered in thecontext of an appraiser’s trespass.ConsentA defendant will not be found tohave trespassed if he or she hadthe explicit or tacit consent of theplaintiff to enter on the plaintiff’sland: Wurstemberger v. RoyaliteOil Co. [1935] 2 D.L.R. 177. Thedefendant, if granted consent toenter on the land, is said to comeon the land by leave and licenceof the plaintiff, which can begiven expressly by contract, or bynon-contractual means such asconduct indicating acquiescence:Davidson v. Toronto Blue JaysBaseball Ltd. [1999] O.J. No. 692.However, mere silence has notnecessarily been found to constituteconsent or acquiescence,and any licence granted may belimited to a certain class of people,whereby those either not fallingin the class to whom the licenceapplies, or those acting outsidethe scope of the authority grantedby the licence, may be treated astrespassers: Pawson v. City of Sudbury[1954] O.J. No. 300; Webb v.Attewell [1993] B.C.J. No. 2408.The English courts have determinedthat, if there has been arevocation of the licence by eitherparty, a reasonable time must begranted to allow the defendantand his or her belongings to beremoved from the property: ToolMetal Mfg. Co. Ltd. v. TungstenElectric Co. Ltd. [1955] 1 W.L.R.761. While the Canadian courtshave not gone this far, they havedetermined that, upon revocationof the licence, the licensee canbe treated as a trespasser, andremoved from the land by reasonableforce if necessary.The principles outlined abovewould likely apply to an appraiserentering onto a piece of land toconduct an appraisal.Case law inappraiser trespass casesIn Wright v. Wright 1960, 25 D.L.R(2d) 452, the British ColumbiaCourt of Appeal, in upholding anorder granted under a Chambersummons appointing an appraiserfor a petition to appraise certaincommercial properties, gaveconsent to what might otherwisehave been considered a trespass,so long as the petitioner acceptedthe responsibility of a possibleaction for trespass againstthem. However, in relation to thepossibility of trespass the judgestated that:“…it will be no trespass toinspect properties that areowned by private companies,substantially owned or controlled bythe respondent.”In National Trust Co. v. Harold’sDemolition Inc. [2001] O.J. No.3269, the court took a similarapproach to a claim of trespassagainst an appraiser who wasappraising commercial propertieson behalf of a company who wasmortgagor to several of the plaintiff’sproperties and payments forthese properties were in default. Onthis matter, the court found that:“such actions by National Trustcould in no way be construed astrespassing on the Westendorpassets or properties.”Recently, in Ghalioungui v.Mississauga (City) [2005] O.J.No. 1224, the plaintiff broughtan action for trespass against thecity’s appraiser for conducting anappraisal of Mr. Ghalioungui’s propertywithout his consent. However,after the judge found credibility inthe defendant’s evidence, whichestablished that the plaintiff hadactually aided the appraiser whenhe was on the plaintiff’s property,the plaintiff’s conduct was found toamount to Mr. Ghalioungui’s consentto the appraiser being on hisland givng that appraiser a licenceto be there.It is useful to make note of thetype of permission you obtainedwhen you went onto the property,i.e., the owner gave his approval; heinvited me in, etc.Other consequencesof trespassIf you are injured on landwhile trespassing, you may becontributory to a greater degree incausing your own injuries than ifyou were invited and injured on thatland. Many properties have hiddenhazards that the appriaser may notknow about. These hazards areusually not apparent. It is betterto seek clarification before goingonto property.Do not enter any property thathas a Do Not Trespass sign on it,absent clear permission to enter.The sign actually allows instantprosecution of trespassers withoutfurther warning.ConclusionThe moral of the story is that, toavoid claims in trespass, you mustensure that your instructions areclear, that the owner either invitesyou to see the property or that youhave other sufficient proof thatallows you to be on the property.Make sure you address this withbanks or others who instruct you.Peeking through the windows whenyou have authority likely is nottrespass, but a prudent appraisermay wish to await the return ofthe owner by leaving his card or byphoning in advance so as to avoidother types of prosecution.Mark R. Frederick is a lawyerwith Miller Thomson LLP, anational law firm based inToronto, with offices acrossCanada. Matthew Bujar is alaw student with Miller Thomsonwho researched this paper.Our thanks to Denis Rivard forhis comments.C a n a d i a nAppraiserE CVolume 51 • book 3 • 2007 valuateura n a d i e n 17

MEMBER PROFILEB y C h r i s t i n e H a n l o nFee to non-feeAIC designation proves valuablein evaluating career optionsn 2004, the Canada RevenueAgency approached JimRokeby, AACI, P. App to fill aposition performing valuationsin its Kitchener office. “The possibilityof working as a non-fee appraiserhad been in the back of my mind forsome time,” recalls Jim. “I wantedto explore what opportunities wereavailable in the public sector. But, itwas not an easy decision.” In fact,it took Jim two years to come to theconclusion that joining the CanadaRevenue Agency was the right move.As a fee appraiser, Jim found hisniche doing expropriation work inthe late 1990s, after working in theprofession for more than 12 years.“That ended up being the bulk of mypractice for the last four years,” heexplains. “It was something that Ireally liked.” In Kitchener, there wereplenty of opportunities for anyonewilling to tackle this specialty work.As a consequence, Jim quicklybecame a victim of his own success.“I was never wanting for work,”Jim reflects, adding that he turneddown more than he accepted. “But,as much as I enjoyed it, expropriationwork is a stressful field.” He began torealize that his beloved sailboat wasbecoming more of a place to releasestress than somewhere to enjoy timewith his family.Then there was Gerry. Jim vividlyremembers the day that hiscolleague died while giving a presentationto a local real estateboard. “Gerry never took a holiday,”he recalls. “He was an excellentappraiser. It was the rest of hislife that suffered.” In fact, eversince starting in the business, Jimhad noticed that precious few feeappraisers ever seemed to retire.But, retirement was one of thefactors the 40-year-old began to contemplatewhen the Canada RevenueAgency came knocking. If he wantedto retire with a good government pension,now would be the time to act.18C a n a d i a nAppraiserVolume 51 • book 3 • 2007EvaluateurC a n a d i e nJim Rokeby, AACI, P. AppWe are very muchgeneralists. I takeon appraisalsthat I would havebeen unlikely toconsider in thefee world.Health and dental benefits wereanother advantage of making thetransition to the public sector. Nevertheless,all the benefits togetherstill would not compensate for thereduction of income Jim knew hewould incur when he closed his privatefee appraisal practice. “I camehere for the ability to work a reasonablenumber of hours and have morefamily time,” he says of his new job.That has a value that cannot be measured.“I knew I was going to miss thework I had been doing and the peopleI was working with,” Jim concedes.“Expropriation requires a teamapproach that I enjoyed. But, as itturns out, the team that I am part ofhere has some interesting and highlyexperienced members, most of whomhave come from different areas offee appraisal.”As for the variety he enjoyed somuch in expropriation, he has found anew expression in his valuation workwith the Canada Revenue Agency.While every expropriation involved adifferent challenge and process, Jimfocused on specific types of properties.In his new position, he could bedoing a house one day, a farm thenext and an industrial facility afterthat. “We are very much generalists,”he explains. “I take on appraisals thatI would have been unlikely to considerin the fee world.” He notes that, fora fee appraiser, the time required ingaining the competency to providea valuation for an entirely new kindof property takes away from thebottom line.“The Canada Revenue Agencysupports the exploration of newcompetencies through professionaltraining time,” says Jim. As well,just as his knowledge of propertytypes has expanded, so has thegeographical area in which he works.A file that involves a new marketcan double or triple an appraiser’stime on a project. Because a feeappraiser could not recover the costinvolved, Jim had always conductedmost of his work in the Region ofWaterloo. Now, his geographical areahas expanded to include much ofsouthwestern Ontario.At the Canada Revenue Agency,Jim conducts appraisals for a varietyof issues with tax implications

including estates, non-arm’s-lengthtransactions, GST, property transfers,and share purchases that involvereal estate. When he assumed hisposition in September 2006, theAgency sent him to London, Ontariofor a thorough review of the taxationsystem that would enable him tounderstand his role in the process.“One of the Canada Revenue Agency’stenets is training its employees,”says Jim. “The Agency supports educationand personal improvement.Since I love to learn, that was somethingattractive about the position.”As an AACI, he is pleased the Agencyprovides both time and financial supportso that he can attend seminarsto fulfill the continuing developmentrequirement of his designation.“In the fee world, if you are notworking, you are not making money,”notes Jim, adding that he alsoappreciates the paid holiday timethat comes with his new position.On the other hand, he now findshis working days more structured.He jokes that he has not had a real‘boss’ since he was 16. But, thisstructure also means that he rarelyworks more than his scheduled 37.5hour week. At the same time, theAgency’s compressed work schedulingallows its appraisers flexibility inthe way they structure their time.This allows for a number of longerweekends in the sailing season,notes Jim.In fact, working with the CanadaRevenue Agency has also provedto be very accommodating to Jim’sactivities with the Appraisal Instituteof Canada (AIC). “Although I wason the local Chapter Executive andthe Board of Examiners as a feeappraiser, the working hours andflexibility here makes this type ofvolunteer activity easier,” says Jim.Thinking from a long-term perspectiveis important when consideringchanges in your professional life,Jim notes. He also advises anyonemoving from a fee to a non-feeposition to ponder their personalsituation carefully before making adecision. No employment situation isperfect, he points out, but it shouldbe a good fit.As a non-fee appraiser, Jim isenjoying his new work immensely.He knows that the Canada RevenueAgency could offer him the opportunityto move into management, but,at the moment, he foresees continuingin his non-fee appraisal position.“Here, the pay-off is different,” heexplains. “You have to balance remunerationand wellness at the end ofit all, but money only counts for somuch. I can live my life comfortablywith the income I make and havemore time for my family.”In Prince Edward Island, BobWilson, CRA, also enjoys the qualityof life that comes with workingas a non-fee appraiser for the publicsector. Since 1996, he has beenworking with the provincial Departmentof Transportation/Public Works(Properties Section) in Charlottetown.Bob Wilson, CRAIt is allencompassing.The appraiser/agentis the main pointof contact with theowners during theentire three to sixmonth process.Some days, the 58-year-oldtakes his wife with him to inspect aproperty. “I enjoy getting out on theroad,” says Bob, adding that thisis one aspect of the job that hascarried over from his fee appraisaldays. Armed with snowshoes or hipwaders, depending on the season,he has a chance to get up close tosome of PEI’s wonderful natural features,from hardwood forest lots tomarshy wetlands. At the same time,each outing allows him to spendprecious time with his wife, who hasmultiple sclerosis.Accordingly, health benefits andpension were an important considerationwhen Bob decided tomove to the public sector 11 yearsago. Another factor, and possiblythe most important one, was thathis eldest son, Scott – who is anAACI and President of the provincialappraisal association – hadannounced he was ready to takethe helm of the family business. “Idecided that I wanted a differentchallenge,” says Bob. “It was timefor the new generation to take over.”In 1969, Bob had joined WilsonReal Estate, the firm started by hisfather. Five years after receiving hisCRA designation, he took over thebrokerage part of the business in1986 from his mother. The firm wasinvolved in appraisals and sales ofresidential and commercial properties,as well as vacation homes andwaterfront properties.But, after more than 25 yearsin the real estate/fee-appraisalbusiness, Bob felt ready for a newchallenge. Originally, he was interviewedfor the provincial assessmentdepartment, but, realizingthat he would not be putting hisreal estate skills to use, he declinedthe position.As a property agent/appraiserfor the Department of Transportation/PublicWorks, he is involvedin both real estate and appraisals.The Department is involved in theacquisition, disposal and leasingof all government properties,including those for the Departmentsof Forestry, Health, Education,Tourism, and Fish and Wildlife,among others. “Anything thatdeals with provincial land comesthrough us,” says Bob. “Our sec-C a n a d i a nAppraiserE CVolume 51 • book 3 • 2007 valuateura n a d i e n 19

MEMBER PROFILEtion maintains records, deeds,surveys and legal descriptions onapproximately 1,700 properties.”“It is interesting because it is sodiversified,” he adds. “I could bedoing an appraisal and buying apiece of marshland one week andthe next week a piece of woodlandor a site for a hospital, sewagelagoon, liquor store or school.”Like Jim Rokeby, Bob has foundworking for the government to bemuch more structured than workingas a fee appraiser. “When youare a fee appraiser with your ownbusiness, you have a lot of flexibility,”he explains. “If I wanted aday off, I would put a note on thedoor. Basically, this is an 8-5 job.But, it is nice to get weekends off,and getting paid for a vacation is abonus.”The main challenge in makingthe shift to the non-fee world hasbeen the bureaucracy. At first, Bobwas taken aback by the amount ofred tape and the number of memoshe had to write. “But,” he addsquickly. “I still enjoy it very much.”“It is quite different from feeappraisal work,” he adds, “in thatyou follow an acquisition from beginningto end.” After being contactedeither internally or externally topurchase or sell a piece of property,the appraiser/agent is responsible forcontacting the property owner, performinga site inspection, appraising,and then completing a phase oneenvironmental audit. Unlike a feeappraiser who has to invest in all thetools for his work, the departmentprovides Bob with everything fromhis camera and tape measure to hisGPS and computer. After completingthe valuation estimate and receivingthe go-ahead from the client, theappraiser/agent prepares the offer. Ifthe offer is accepted, the appraiserrequests a title search, contacts thesurvey department, if necessary, fillsout any applications for subdivisionapprovals, sends ministerial memosto the Treasury Board or ExecutiveCouncil, requests funds, and evenattends to the closing by taking anoath from the owners before registeringthe deed.“It is all-encompassing,” saysBob, adding that the appraiser/agentis the main point of contact withthe owners during the entire threeto six month process. On the otherhand, the results do not always needto be as precise as a fee appraisalciting a specific value for a specificdate. Instead, department appraisersgenerate a range of values thatallow property agents some flexibilityto negotiate.Bob was hired by the departmentbecause of his CRA designation andhis background in real estate. But,because the agents must undertakesuch a specific process, healso agreed to start taking coursesunder the International Right of WayAssociation (IRWA) as soon as hewas hired. The Manager of ProvincialLands, Leo Creamer, served as hismentor. In 2003, Bob was accreditedunder the Appraisal Formatwith an R/W-AC designation. Aftercompleting all 20 courses, both Boband Leo became the first people inthe department to be awarded theSenior right-of-way designation or20C a n a d i a nAppraiserVolume 51 • book 3 • 2007EvaluateurC a n a d i e n

SR/WA. The government covered thecost of the courses through its staffdevelopment fund.“Leo stressed that all staff shouldfollow the IRWA course of study,”notes Bob. The program encompassessuch subjects as engineering,property management, appraisal,contamination, negotiation skills, andreal estate law, among others. Leoalso encourages staff to take separateappraisal courses from the AIC.Equally useful in Bob’s current workhas been his network of contactsfrom his fee appraisal days. “I willoften contact other appraisal firmsin the Maritimes to ask if they havedealt with a particular type of propertysuch as submerged lands, harboursand contaminated sites,” says Bob.When he was assigned a highwaybypass acquisition involving morethan 100 owners and 40 properties,Bob delved into skills he acquiredthrough his years in both the fee andnon-fee sectors. “I was the sole propertyagent on the project,” he recalls,“and the project went quite well.”At the same time, one of the mainreasons he enjoys his job so muchis the people with whom he works.“We have a very committed staff of14 people including para-legal, titlesearcher, property agents and supportstaff.”Bob looks forward to working in thesame section until he retires a fewyears from now. Some time ago, hewas offered a position as a supervisorwith highway acquisitions, but choseto stay with general acquisitions. “Idid not want to be limited to somethingthat specific,” he explains. “Ilike the flexibility of being able to doother things.”When asked what advice he wouldhave for someone switching fromthe fee to non-fee world, he recommendsgaining as much knowledge aspossible about government acts andregulations as well as the inner workingsof the department being workedin and the various acts governing itsoperation. He also emphasizes theimportance of taking courses andembracing learning opportunities.These are the things that have servedhim well and led to the satisfyingcareer in non-fee appraisal that hecontinues to enjoy each day – excepton weekends of course!Making thetransitionMembers making the transitionfrom non-fee employment to privatepractice can take advantageof a wealth of online resourcesthat address management andregulatory issues related tostarting your own business andpractice, in a Canadian context.Practical advice on establishing,marketing and managing a successfulbusiness are just a clickaway, and, in most cases, arefree of charge. Check out thesecourses and publications:Getting startedin small businessA free publication that coverstopics such as planning a marketingstrategy; the value of abusiness plan; sources and typesof financing for a new business.It includes checklists, tools andresource links. Published by theCanadian Bankers Association.http://www.cba.ca/en/viewPub.asp?fl=6&sl=23&docid=40&pg=1Small business managementA free online course that represents20 hours of online learningon four knowledge areas, offeredby a coalition of organizationsthat are pooling their resources tobring new learning opportunitiesto the small business community.Modules include study of businessfinance and marketing; customerservice; strategic management;leadership and delegation; as wellas primers on privacy and internationaltrade. Sponsors includeScotiabank, The Canadian Societyof Management Accountants ofCanada, The Canadian Institute ofChartered Accountants, The CanadianAssociation of ManagementConsultants, Export DevelopmentCanada, the National Quality Instituteand the Canadian Federationof Business.http://vubiz.com/V5/Code/SPC _SBMC _ Default.aspGovernmentof Canada resourcesThe federal government also providesa variety of services throughagencies such as Industry Canadaand Canada Business Servicesfor Entrepreneurs. The CanadaBusiness’ Online Small BusinessWorkshop covers a broad rangeof ‘Business Basics’ and includesregulatory information, a start-upchecklist and information on whatyou need to know about becomingan employer.http://www.cbsc.org/servlet/ContentServer?pagename=OSBW/CBSC _ WebPage/CBSC _ Splash-Page _ Temp&c=CBSC _ WebPage&cid=1106841330036&workshop.cfmCanada Business also offers aselection of Fact Sheets, Province-specificGuides and InteractiveBusiness Planning Software.http://canadabusiness.gc.ca/gol/cbec/site.nsf/en/bg00328.htmlStrategis is Industry Canada’s website for Business and Consumers.The Managing for Business Successsection is a web portal forowners and managers of smalland medium-sized businesseswho need sources of practicalinformation, tools and advice forjust-in-time solutions to their managementchallenges.http://strategis.ic.gc.ca/epic/site/mfbs-gprea.nsf/en/HomeFor those interested in doing businesswith government, the Officeof Small and Medium Enterprisesat Public Works and GovernmentServices Canada provides information,counseling and trainingservices designed to strengthenaccess to government businessand de-mystify the procurementprocess.http://www.pwgsc.gc.ca/acquisitions/text/sme/osme-e.htmlC a n a d i a nAppraiserE CVolume 51 • book 3 • 2007 valuateura n a d i e n 21

VOLUNTEER RECOGNITIONCommitment and dedication…the keys to our successThe Appraisal Institute of Canada(AIC) is blessed with a rich abundanceof determined and dedicatedvolunteers who make thework of the Institute possible andwho help move the professionforward in progressive and fundamentalways. Under heavy commitmentsboth professionally andpersonally, AIC members havestepped to the fore and proudlyserve in so many ways. Whetherthrough elected office, servingon a committee, or assisting inconference planning, their contributionsare invaluable.We are pleased to recognizeand honour our dedicated volunteersin Canadian Appraisermagazine. In each issue, you willmeet some of your colleaguesand learn why serving the Instituteis so important to themboth personally and professionally.We always need individualsto serve the Institute, now andin the future…we are sure thattheir stories will inspire you to getinvolved.22C a n a d i a nAppraiserVolume 51 • book 3 • 2007EvaluateurC a n a d i e nJohn Dean, AACI, P. AppCity of SurreyJohn Dean, AACI, P. AppJohn Dean, AACI, P. App calls Mission,British Columbia home andworks for the City of Surrey’s RealtyService Division Engineering Department.John joined the AppraisalInstitute of Canada (AIC) in 1973,but he waited until his career waswell established before turning hisattention to volunteering. In theearly 1990s, John first becameinvolved with BC’s Admissions Committee.At that time, he was oneof the owners of ARC AppraisalsLtd, an independent fee appraisalfirm in Abbotsford. He began volunteeringby working with the teaminterviewing BC candidates for theCRA and AACI designations. By themid-1990s, John was chairing mostof the interview panels, as otherpanel members grew to rely uponhis extensive interview experience.These days, John is the Chair of theBoard of Examiners for the AppliedExperience program. It is estimatedthat he has sat on over 100 interviewpanels since he began volunteeringfor the Institute.Despite John’s busy personaland professional life, his volunteerwork with AIC is still a priorityfueled by his belief that “a personshould ‘give back’ to an organizationfrom which they benefit.”He also credits the support forvolunteering that he received earlyin his career from David Highfield,AACI, P. App and says that David“was very persuasive in keepingme involved.”Thinking about the benefits hehas derived through AIC volunteering,John lists his wide circle offriends and contacts in the industryas a direct result of volunteering. Healso reflects on how the process ofreviewing samples of candidates’work prior to the designation-grantinginterview has sharpened hisappraisal review skills and providedexposure to a wide variety of reportwriting st yles. John finds thisparticularly beneficial, as appraisalreviews form a large part of his currentposition with the City of SurreyRealty Services Division.

John makes a point of distinguishingbetween the reasons andbenefits that AIC members mightconsider before volunteering for theInstitute and offers this pragmaticadvice: “The most importantreason to get involved is simplythat it is the right thing to do. Themost important benefit of beinginvolved is the chance to widenone’s circle of contacts within theprofession. This may lead to additionalwork assignments, providecontacts for market information,and help land that ideal careerposition. Volunteers tend to have apositive outlook and are (generally)not prone to whining. Contact withthem can help keep an appraiserenthusiastic and interested in hisor her chosen profession.”Robert Tipple, AACI, P. AppAltus GroupRobert Tipple, AACI, P. AppBob Tipple, AACI, P. App, AIC’sDirector for Newfoundland andLabrador, has been an AIC membersince 1974 when he was hired asa junior appraiser for CMHC. Bobstarted volunteering for AIC almostimmediately and has maintainedhis involvement for over 30 years.His first foray into volunteering waswith the Newfoundland Chapter ofAIC (now the Newfoundland ProvincialAssociation. of the AIC). Hewas elected to Provincial Council,became Chapter Secretary for twoyears, and, in the early 1980s,became Chapter Chairman, servingon various committees until2000 when he was elected ProvincialPresident. In 2002, Bob waselected to AIC’s Board of Directorsand is currently in his sixth year onthe Board.Bob’s long-term commitment tovolunteering is driven by his beliefin nurturing succeeding generationsof AIC members. He says, “Inthe early days of my career, I hadthe benefit of learning from severaltremendously dedicated AIC members.I clearly remember one daywhen I was having difficulty sortingout an income approach and mysupervisor, an experienced AACI,made time to get me back on trackdespite his incredibly busy day.The fact that I recall that day yearslater is testimony to how much of apositive impact he made on me. Idid not realize it at the time, but mypositive influences were preparingme for the future. Now, and perhapsgoing back a few years, it is my turnto be a positive influence for othersand one of the ways I can do that isby volunteering. Particularly, I wantto make a difference for the candidateswho are following behind me.”As well as contributing to theAIC’s future, Bob acknowledgesthat volunteering brings him manytangible benefits. “Being an AICvolunteer has benefited me in myprofessional life because it providesme with the opportunity to beexposed to many aspects of being aprofessional valuer and real estateproperty advisor. I was fortunateenough to begin my career in thepublic sector and then to make thetransition to private practice, so Ihave some insight into both. Havingserved on various provincial committeesand currently serving ontwo national committees, as well asbeing a member of the AIC Boardof Directors, I have a greater appreciationfor issues and opportunitieswhich are addressed by all aspectsof our profession.”Bob goes on to say, “I immediatelythink of an example of theperfect blending of volunteerism andprofessional services. In 2003, therewas a devastating mid-winter floodin the small community of Badger,Newfoundland and Labrador. Ourfirm, Altus Group, was engaged bythe Canadian Red Cross in what itrefers to as the ‘Recovery’ phase ofits operation, and I was the valuationprofessional there. My relationshipwith the Red Cross continues fouryears later as a Disaster Managementvolunteer, and, while attendingthe AIC’s June Conference andAGM in Vancouver, I was invited bythe Red Cross to visit the Telus/RedCross BC Flood Information CallCentre. This was a great opportunityto be an ambassador for ourInstitute and a representative ofour profession.Finally, Bob would like to sharewith the newer members of the professionsome thoughts on volunteering:“Leadership is why you shouldbecome involved as a volunteer withAIC – learning about leadership,experiencing leadership and, if youso choose, going for it and becominga leader. Start as a committeemember either locally or nationally,challenge yourself by volunteeringas a committee chair, and moveonward as your experience, availabletime and comfort level permit.Your time and effort will make adifference to current and futuremembers who you may never know,but who will appreciate it. You getmuch more out of a well-run organizationthan you ever put in – butwho’s counting?”C a n a d i a nAppraiserE CVolume 51 • book 3 • 2007 valuateura n a d i e n 23

AICpr o g r a minitiativesM e m b e rS e r v i c e sB y R o b e r t T i p p l e , A A C I , P. A p pC h a i r , M e m b e r S e r v i c e sD e l i v e r y W o r k i n g G r o u pStriving for efficient, consistentand accurate member servicesrofessional services are providedby members of theAppraisal Institute of Canada(AIC) to clients and otherusers. Member services are providedto members by the AIC in supportof their professional services. Bothare specifically referred to in the AICStrategic Plan and both are important.However, this is about whatis currently being considered withregard to member services becauseeveryone – staff, volunteers andother members – is involved.The Board of Directors addressedthis subject at its May 2006 meeting,when it passed a motion whichestablished a Member ServicesDelivery Improvement Task Forceconsisting of the 10 provincialpresidents. The mandate of the TaskForce was to “explore current andalternative service delivery modelsand to develop a service deliverymodel that is efficient, consistentand accurate, which eliminatesredundancies and produces measurableresults for AIC members.”24C a n a d i a nAppraiserVolume 51 • book 3 • 2007EvaluateurC a n a d i e nThe appointment of all provincialpresidents to the Task Force wasto determine if the so-called ‘politicalwill’ existed to consider possiblechanges to the delivery of memberservices. The conclusion was that thedesire was there, subject to considerationof a variety of factors, includingprovincial legislation in licensedprovinces, the infrastructure already inplace in provinces with larger memberships,and time zone differencesacross the country.Why is this being done?Compared to the number of membersin many other professional organizations,the AIC is relatively small. Nevertheless,there is a certain amountof administration infrastructure whichmust be in place. Notwithstandingthis, can the current system beimproved? Is a more efficient methodof communication possible betweennational office and executive directorsto ensure that AIC policies areimplemented and administered moreuniformly across the country? Arethere services which might be betterhandled nationally rather than provinciallyand vice versa? Should theseservices be more specifically definedso that members clearly know whereto call for what service? Given availabletechnology, should we continueto have 11 web sites and numerouslogos? How can technology be used toour advantage? How can we simplifymember services delivery so that newcandidates can more easily and quicklyaccess the information they need?To move this forward, in March2007, the Task Force establisheda Working Group consisting of twoprovincial presidents representing theelected provincial leaders, two executivedirectors representing the provincialadministrators, CEO GeorgesLozano representing national office,and the undersigned Board memberas Chair. The mandate of the WorkingGroup is to “build an administrativeteam that reports to the CEO, usingexisting staff resources from acrossthe country.”The Working Group has met byteleconference and most recently inVancouver coinciding with the AICAGM and annual Conference.A report is currently being preparedfor submission to the Task Force,which will then make a recommendationto the Board of Directors priorto its November 2007 meeting inOttawa. The Working Group wouldappreciate receiving commentsfrom candidates and designatedmembers on the above-outlinedprocess or suggestions for specificmember service delivery improvement.Please send any comments torobert.tipple@altusgroup.com.

L e a r n i n ga d v i s o r yB y L e a c y O ’ C a l l a g h a n - O ’ B r i e n , C A ES e n i o r A d v i s o r , P r o f e s s i o n a lD e v e l o p m e n t a n d M e m b e r S e r v i c e sThe written exam –a key aspect ofelevating the professionprofession is characteristicallydefined as a disciplinedgroup of individualswho adhere to ethicalstandards and uphold themselves to,and are accepted by, the public aspossessing special knowledge andskills in a widely recognized body oflearning derived from research, educationand training at a high level,and who are prepared to exercisethis knowledge and these skills inthe interest of others. 1 A professionalso characteristically maintains astandardized and rigorous approachto professional education. A designationexamination that tests criticalprofessional skills and the ability toapply theory to practice of that professionis typically the final step inthe course of assessing an individual’sreadiness to assume the statusof a designated member.Over the last decade, theAppraisal Institute of Canada(AIC) has remained faithful toan ambitious plan to redefinethe profile of the appraiser as aprofessional, and to ensure thatAIC’s designations are branded asthe pre-eminent qualification forthose practicing the profession inCanada. Measures such as theintroduction of a new curriculum forthe program of professional studies;adoption of a Guided Case Studymodel to fulfill the demonstrationreport requirements of the Institute;26C a n a d i a nAppraiserVolume 51 • book 3 • 2007EvaluateurC a n a d i e nextension of the period of mentoredapplied experience and a degreerequirement for both designationshave been introduced over timein support of these strategicgoals. In this regard, the latestinitiative is a revamped designationexamination, with both written andoral components, the final testbefore the mantle of professionalismis conferred.The written examination has beendesigned to test candidates’ abilityto apply the First Principles of Value,using the theoretical knowledgeacquired in formal education and inpractice, as well as to confirm thata breadth and depth of expertisehas been attained through practicalexperience. Examinees will berequired to select one of three casestudies provided, and three of severalshort answer questions. Thegrading will be carried out by trainedAIC members, who will assign markson the basis of the application ofthe First Principles of Value (comprehensivenessand completenessof answer); the quality of argument(underlying logic, reasonablenessof assumptions), and the quality ofcommunication (clarity, convincing/persuasive ). The examinations, threehours in length, will be held in examinationcentres across Canada atregularly scheduled intervals throughoutthe year. The passing grade hasbeen set at 70%.Upon successful completion of thewritten examination, candidates willbe eligible to attend the oral designationinterview. The interview is basedon Behavioural Description Interview(BDI) principles. Trained examinerswill use BDI techniques to verify thatcandidates for designation possesslocal market knowledge, along withthe key competencies and behavioursthat are considered most critical toprofessionalism and that cannot easilybe attained through training – integrity,critical thinking, listening andresponding, self development, andrelationship building.This examination concept will beintroduced first for the AACI designationat the beginning of 2008, andlater that year for the CRA designation.A detailed guide to examinationpreparation and procedures for applicationwill be provided directly to candidatesin the fall. This new approachto the designation examination is theculmination of exhaustive work onthe part of members of the LearningAdvisory Committee, in consultationwith the Board of Directors and otherstanding committtees of the Institute,to create a professional assessmenttool befitting of the high standards ofeducation and practice that are thehallmark of the ‘new’ AIC.Endnote1. The Australian Council of Professions(2004)

M A R K E T I N GB y J o a n n e C h a r l e b o i s ,D i r e c t o r ,M a r k e t i n g & C o m m u n i c a t i o n sMaking what is old new againhe 2007 Appraisal Instituteof Canada (AIC)Annual General Meetingwas a watershed momentfor both the membership and myself.Now, we can look forward to tacklingthe marketing campaign that everyonehas anxiously awaited during thepast several years. Our challenge isto ‘make what is old new again,’ i.e.,Appraisal Institute of Canada, andto promote the value of the designations.Now, we have turned ourfocus to ‘Marketing.’ In this magazine’swinter issue of 2004, MikeGarcelon wrote an article entitledAppraisers are real estate’s bestkept secret.Through a comprehensive marketingand communication plan, whichhas been on the backburner awaitingresolution of the branding issue,AIC’s best kept secret is about tolose that epithet. We will be dispellingthis myth with numerous targetaudiences, university students,professionals considering careeralternatives, stakeholders, employersand, of course, your clients. Wewill be:• Promoting the wide array of skillsof professional appraisers andthe services they offer (to eradicatethe belief that appraisersonly offer point-in-time appraisalservices)• Developing greater recognitionof the Institute, its members andthe value provided by professionalappraisers• Attracting more people to thefield and the designation• Growing the Institute’s membershipto counter a rapidly agingmembershipThrough a comprehensive marketing andcommunication plan, our challenge is to‘make what is old new again.• Creating more opportunity formember education; ensuring acommitment to professional practicestandardsLast month, AIC chose CundariSFP as AIC’s Marketing Agencyof Record. They have the relevantdepth and years of experiencegained through working with numerousnot-for-profit, professional serviceassociations, real estate companies,and educational/researchorganizations. They have sharedcase studies with us that demonstratedhow they have successfully‘made what is old new again.’ Theyearned the confidence of both AICmanagement and the CommunicationsCommittee by demonstrating aclear understanding of the requirementsof working with an associationthat communicates in both officiallanguages and has to address theneeds of a decentralized organiza-28C a n a d i a nAppraiserVolume 51 • book 3 • 2007EvaluateurC a n a d i e n

tion with multiple mandates andstakeholders. Their clients echoedthat Cundari SFP “takes the time tounderstand the complexity of yourworking environment.”Many people view marketing asadvertising. It is much more thanthat. In the later part of 2007, thefirst phase of this initiative, the InternalCampaign, will be launched. TheExternal Campaign will follow shortlythereafter in the early part of 2008.There is no doubt that AIC membershave a role to play as marketingambassadors. We will be creating arobust platform of communicationtools for members to use in theirnew role as marketing ambassadors.There will also be a greater emphasison marketing at the 2008 conferencein St. John’s, Newfoundlandand Labrador.Last month, Canada hosted theFIFA U-20 showcasing our country asa tremendous host for this internationalsoccer championship. Canadiansexcelled at the Pan AmericanGames in Rio this summer. Thereis no doubt that the adage ‘TEAM- Together Everyone AccomplishesMore’ applies to our marketing challengesthat lie ahead, as we embarkon a marketing campaign neverundertaken in the history of ourorganization.In 2008, AIC will be celebratingits 70 th Anniversary. We believe itis timely that this will be the yearwe will collectively embark on acampaign demonstrating that weno longer are real estate’s bestkept secret.Like the Communications Committeemembers, I am looking forwardto new challenges and opportunitiesas we undertake this vitalproject. The initial marketing campaignincludes: the brand/marketingpositioning and development of keymessages; communications blueprint;new identity; brand character,redevelopment of the web site; andthe official marketing launch, bothinternally and externally.That is a lot of work to do and thetimeline is tight. Stay tuned, as wecollaboratively crack the mystique ofmarketing your business.In the meantime . . .Some questions fee members could be asking themselves are:• What kind of marketing tools do I rely on?• How do I know if my marketing efforts are working?• Does a web presence enhance my business profile?• What is my overall marketing strategy?• When business is slow, what do I do to keep busy or to spark new business?• What role does networking play?Some questions non-fee members could be asking themselves are:• What type of marketing tools does my organization use to raise its profile?• Would these or other marketing tools be useful to increase the profileof AIC members within my organization?• What skills do AIC members have that are needed by my organization?• Would networking within my organization and within my professionhelp to increase my profile and the profile of AIC members?As the summer of 2007 winds to a close, the Appraisal Institute ofCanada (AIC) Communications Committee is deeply engrossed with thenext phase of its communications and marketing initiative. I am excitedto be chairing this committee and collaborating with its talented team ofvolunteers and staff from across the country. In partnership with our newAgency of Record, we are all most optimistic as we prepare to roll out thefirst phase of the AIC Marketing and Communications Plan.AIC is regarded as a visionary body and leader within the internationalvaluation community. Inspired by a drive to maintain and advance thisreputation and elevate the profession and our members, AIC is committedto implementing this communications and marketing plan. This initiativewill be on a scale not seen before in our history, and it is a privilegeto be associated with this committee as it undertakes this vital project. Asthe Plan unfolds, I look forward to the opportunity to liaise with membersfrom across the country as we all work in concert to advance this programnationally, provincially and locally.Paul Olscamp, AACI, P. AppChair of AIC’s Communications CommitteeC a n a d i a nAppraiserE CVolume 51 • book 3 • 2007 valuateura n a d i e n 29

R E A L E S T A T E F r a u dB y G e o r g e M a u r i c e , A A C I , P. A p pC h a i r , R e a l E s t a t e F r a u d T a s k F o r c eAppraisers – a key element inreal estate fraud preventionhile there are varioustypes of fraud, thisarticle is limited tofrauds involving realproperty and financing.One instance of fraud may beviewed as a misrepresentation ofincome, debts and the ability torepay a loan. If this type of fraudis looked at in the most positive oflights, it is the (possibly well intentioned)attempt by a borrower toobtain financing with the hope andexpectation of making the paymentsto ensure the continuing ownershipof the subject property.A second type of fraud is theoverinflation or misrepresentationof the value of the property in orderto scam or deceive the lender intoadvancing funds for the benefit ofthe fraudster.The obvious victim in both ofthese scenarios is the lender. Froma lender’s position, overvaluationof property causes an undervaluationof risk. This will affect loan lossreserves, profits and, if extended,may possibly affect liquidity levels.If, because of fraud, a propertyis taken back by the lender andsubsequently sold, because ofinflation it may appear that therewas no significant measurable loss.This is far from the case. Whena financial institution is involvedin a power of sale or mortgageforeclosure, the actual cost to theinstitution is often tens of thousandsof dollars in legal fees, time andthe employees’ involvement inthe procedure.However, the lender is not thesole victim.30C a n a d i a nAppraiserVolume 51 • book 3 • 2007EvaluateurC a n a d i e n• Investors in the lending institutionare also victims.• Consumers are victims of fraud,when overstated property valuesare used by the various assessingdepartments to determine valuein order to aid the municipalitiesin levying taxes.• Appraisers are also victimsbecause1. the ‘bad apples’ cause insuranceclaims, and2. the lending industry may startto negatively view all appraisersbased upon the bad reputationof a fewThe appraiser’s signature is onthe bottom line of the appraisalreport, and, with our society’s growingpropensity to sue, the appraiseroften ends up as the target of lenderswho may have lost money. Asfraud becomes more pervasive,appraisers are in the cross hairs.The anecdotal information wehave indicates the ironic reality that,without an appraiser and an inflatedappraisal report, many frauds couldnot occur. This underlines the factthat the appraiser and his or herethics are a key element in preventingreal estate fraud. A further ironyin this process is that, while themajor participants in the fraud mayshare fraudulent profits in the rangeof hundreds of thousands of dollars,the appraiser’s reward for his lapseof judgement is typically limited to

only $300-$500. For this, he or shehas become a willing participantin the fraud, driven by the beliefthat cooperating in this scheme willdeliver future business.As the appraiser, it is not sufficientthat you are aware and recognizeany ‘red flags’ that may indicatea fraud situation. Additionally, youmust be proactive in drawing theseindicators to the attention of yourclient. The appraisers are the onesthat the lenders rely upon to givethem accurate, unbiased and professionalopinions. In this regard, variousmembers of the Appraisal Instituteof Canada (AIC) officers havemet with the financial institutions inorder to determine their needs andhow we can better serve them asclients.This is only one level of communicationand, in order to be truly effectiveand recognized as the professionalsto be relied upon, the individualappraisers must also recognize theirclients’ needs and react to them.For the most part, Canadianshave a tendency to avoid being‘snitch cats,’ however, if there issomething suspicious or unusualabout any transaction in which youare involved, you are being unprofessionalby failing to advise yourclient. While we often hear anecdotalaccounts about what has beenobserved by an appraiser, seldomdoes the appraiser actually call theAIC or formally refer the observation/situation for further investigation.Just as it is your responsibility toprotect and advise your client, it isalso your responsibility to protectboth your Institute and your fellowappraisers by reporting your concerns.Advising the AIC may be donein a confidential manner and wouldgo a long way to ensuring the continuationof the high regard that thelending institutions currently have formembers of the Institute. Remember,“If you are not part of the solution,”you may very well be viewedas “part of the problem.”Ad HocReal Estate Fraud Task ForceGeorge Maurice, AACI, P. App- Chair(416) 866-7151gmaurice@rogers.comPaula Malcolm-Schaller, CRA(613) 836-1445paula.malcolmschaller@rogers.comKimberly Maber, AACI, P. App(306) 652-0311Kimberly.maber@suncorp.caEd Saxe, CRA(416) 630-2668ed@edjline.comGeorge Ward, AACI, P. App(250) 492-9370geoward@shaw.caC a n a d i a nAppraiserE CVolume 51 • book 3 • 2007 valuateura n a d i e n 31

P r o f e s s i o n a lP r a c t i c eB y R o b e r t P a t c h e t t , L L . B , C D , A I CC o u n s e l l o r , P r o f e s s i o n a l P r a c t i c eIn the courtsdecision from theCourt of Queen’sBench of NewBrunswick has confirmedsome important pointsfor the appraisal profession.BackgroundA candidate member of theAppraisal Institute of Canada(AIC), and a licensed appraiserin New Brunswick, wasbrought before the provincialdiscipline committee forbreaching sections of the legislation,in that he was completingappraisal reports andnot having them appropriatelyco-signed. In New Brunswick,the provincial legislation confersauthority on the provinciallicensing body to disciplineits members. Therefore, thiswas not brought before thenational Professional Practicecommittees.At the discipline hearing,the candidate argued that heheld the equivalent qualificationsto practice appraisaland that he was competentand able to sign appraisal reportson his own. The Discipline Committee(DC) disagreed and viewedthe failure to abide by the legislationand not have reports properlyco-signed to be serious misconduct.The legislation provides thata licensee may appeal the decisionto the Court of Queen’s Bench,which he did.Standard of reviewThe courts first considered whatwas the appropriate standardof review for them to apply inreviewing the decision of the dis-32C a n a d i a nAppraiserVolume 51 • book 3 • 2007EvaluateurC a n a d i e nThe courts will likely give agreat deal of deference to thedecisions of the ProfessionalPractice committees.cipline committee. This is a matterof assessing appeal rights underthe legislation, the expertise of theDC, the purpose of the legislation,and the nature of the problem.The court stated that the occupationof appraising the valueof property is a specialized areaoutside the general knowledge ofa judge, and the four appraiserson the DC were in a better positionto assess the gravity of thematter and possible conduct ofthe candidate. As such, they areentitled to deference regardingtheir decision.The court found that theultimate purpose of the legislationis protection of the public,by determining who may or maynot practice real estate appraisalin New Brunswick. The legislationprovided for a wide range ofpossible sanctions for the DC tochoose from and, therefore, thistoo favours deference.Finally, on the nature of theproblem, they found that thiswas a matter of mixed fact andlaw, where the particular factintensiveelements of this casewill not determine future cases;and, therefore, suggesting ahigher degree of deference.OutcomeThe court found that the DC’sdecision was reasonable. Thisreferred to the decision thatthere was a breach of thelegislation. On the questionof the sanction, the courtaffirmed the sanction of onemonth’s suspension.What this means to appraisersis that the courts will likelygive a great deal of deferenceto the decisions of the ProfessionalPractice committees. The AIC ProfessionalPractice committees takethis role very seriously and are sensitiveto the impact their decisionshave on members. Each complaintthey investigate, adjudicate or reviewon appeal is afforded the time andeffort to maintain the essential balancebetween protecting the publicand working in the best interest ofthe profession.If you wish to read this decision,the citation is Perron v. NB Associationof Real Estate Appraisers– 2007 NBQB 187.

S t a n d a r d sB y I a i n H y s l o p A A C I , P. A p pM e m b e r , S t a n d a r d s C o m m i t t e eThe problemwith multiple usersfter the completion anddelivery of a report, itis not uncommon foran appraiser to receivea request for a letter of transmittalallowing use and relianceby an intended user not namedin the original report. The issuanceof a subsequent letter oftransmittal authorizing use of anappraisal report in this manner isgenerally at the discretion of theappraiser. Unless agreed to whenthe assignment was accepted, theappraiser does not have an obligationto provide subsequent lettersof transmittal.Provided that the originalintended user has given approval orhas acknowledged no further relianceon the report, that there areno conflicts, and that the report isadequate for the new intended use,a letter of transmittal can be issued.Guidance for these circumstancesis found in the Standards practicenotes:12.14.1 - ClientA statement similar to the followingmay be appropriate:“This report is intended for useonly by (identify the client) and(identify any other intendedusers by name and type). Useof this report by others is notintended by the appraiser, andany liability in this respect isstrictly denied.”12.15.1 - Intended useA statement similar to the followingmay be appropriate:“This report is intended only foruse in (describe the use), andfor no other use.”34C a n a d i a nAppraiserVolume 51 • book 3 • 2007EvaluateurC a n a d i e n12.15.2 - Intended useAn appraiser must identify theclient and, to the extent possible,other intended users by communicationwith the client prior toaccepting the assignment, usingcare not to violate confidentialityrequirements. Identification ofthe intended use of the reportis one of the essential steps indefining the consultation problemto ensure the use of thereport is not misleading.On occasion, however, someappraisers have been asked toauthorize the following clause:“This report is addressed to(the lender), their respectivesuccessors and assigns (including,without limitation, investorswho purchase the mortgageloan or a participation interestin the mortgage loan, and thetrustee in a securitization thatincludes the mortgage loan),each servicer of the mortgageloan, and all rating agenciesinvolved in any sale, securitizationor syndication involvingthe mortgage loan mayuse and rely upon this report,including, without limitation,utilizing selected informationfrom the report in the offeringmaterials(either in electronic orhard copy format) relating toany sale securitization or syndicationinvolving the mortgageloan. The consultant agrees tocooperation in answering questionsby any of the above partiesin connection with the sale,securitization or syndication, ascommunicated by (the lender).”The Standards Committee considersacceptance of this clauseas problematic from both a standardsperspective and businesspractice.There are three major concerns.First, if the report wasprepared for (the lender), wecan assume that the (lender)is likely the client and certainlythe intended user. However, theclause identifies virtually everyparty who may even remotelyhave an interest in the property orthe syndication, essentially with allof whom the appraiser will neverhave had any contact.For this aspect of the clause,reference can be made to StandardsRules 6.2.1 and consultingrule 10.2.1, which both statein the report that the appraisermust identify the client and otherintended users by name.Although authorizing the clausemay, in a technical sense, complywith these rules, doing so certainlystretches the concept ofintended users beyond a reasonablerange. The clause will offsetStandards Comment 7.2.3. “Aparty receiving a report copy fromthe client does not, as a consequence,become a party to theclient relationship.The second and perhaps mosttroubling aspect of this clauseis the agreement permitting theutilization of “selected informationfrom the report.” Depending uponthe nature of the original assignment,valuation methodologyand data which has been utilizedin the report, permitting use of

selected data, the appraiser mayinadvertently create the basis forunintended results and the likelihoodthat out of context resultswill arise.Agreeing to these terms couldcreate the basis for an Ethicsviolation, whereby the memberwould have permitted the relianceon some isolated section ofthe report, which, if relied uponwithout reference to the entirereport or relevance of the sectionof the named parties, couldbe misleading.A third area of concern is thelast sentence requiring cooperationin answering to all of thenamed parties. Again, this maynot result in a Standards violation,but, taken as part of the overallclause, however, agreeing to thiswould only support reliance by thevarious parties.It is evident that (the lender)wishes to utilize the report in supportof its asset value in sometype of offering. On its own, thisis benign and, in fact, couldbe beneficial. Referencing anappraisal report, or including awell prepared report as part of apackage, could be good advertising,provided that the appraiseris satisfied with copyright issuesand has secured reasonablelimitations in terms of client andintended users.In reality, however, (the lender)probably does not wish to includethe full report, much of which theywould probably deem to be unimportant.The intention is to includeselected, likely out of context dataor other contents which will helpto gloss up their presentation.The request to authorize thisclause and its implications underscorethe importance and benefitswhich the Standards provide. Notonly as guidelines for generalappraisal practice, but also asprotection in avoiding unwantedissues of liability.Standards CommitteeRay Bower, AACI, P. App – Chair(519) 944-5005rbower@bowerappraisal.comIain Hyslop, AACI, P. App(250) 493-6734iain@inlandappraisers.comAnne Clayton, AACI, P. App(250) 782-8515anneh@pris.caChris Perret, AACI, P. App(780) 401-7081chris@mcnallyvaluations.comCraig Soderquist, AACI, P. App(403) 346-5533Craig _ soderquist@soderquist.ab.caBrian Varner, AACI, P. App(416) 392-1858bvarner@toronto.caBrad Wagar, AACI, P. App(403) 215-1050brad.wagar@outlookrealty.caC a n a d i a nAppraiserE CVolume 51 • book 3 • 2007 valuateura n a d i e n 35

I N V E S T I G A T I N GB y M i c h a e l L e e , A A C I , P. A p pM e m b e r , I n v e s t i g a t i n g C o m m i t t e eFacing a Disciplinary hearing36C a n a d i a nAppraiserVolume 51 • book 3 • 2007EvaluateurC a n a d i e nt has happened. You havereceived ‘The Letter’ from theAppraisal Institute of Canada(AIC). One of your clients hascomplained about you, and nowyou have received a formal chargeletter, giving you the option ofmaking a conditional guilty plea orrequesting a formal hearing. Whathappens now?In order to understand what happensnext, it is important to understandwhat has already happened.If someone has lodged a complaintagainst you concerning oneof your reports, AIC staff will havedone the following: 1) acknowledgedreceipt to the complainant; 2) sentyou notice that a complaint hasbeen lodged; 3) requested from youa copy of the report and the entirecontents of your working file; and 4)sent the entire file to the Counsellor,Professional Practice. The Counsellorwill have reviewed the complaintand will usually have contacted youfor clarification and or additionalinformation. Based on his review, ifhe had found there were no groundsfor the complaint, he would haveclosed his file. But, in your case, hedetermined that the file should bereferred to the Investigating Committee(IC) for further investigation. Heforwarded the file to the Chair of theIC who, in turn, assigned it to one ofthe committee members (investigators)to complete an investigation todetermine if the appraisal conformsto CUSPAP. (Remember, IC doesnot arbitrate value. If the complaintwas determined to be merelya valuation issue and there were noapparent CUSPAP violations, the filewould have been closed.)The investigator then conducteda detailed and thorough investigationof your report and file. He/shestudied your report line-by-line, testingit to see whether it conforms toCUSPAP. As part of this process, theinvestigator checked that the logicwithin the report flows well and theconclusions are well-founded. Duringthe investigation, you were probablycontacted by the IC for additionalinformation and/or clarification. Uponcompletion of the investigation,the committee member prepareda report summarizing his/her findingsand recommended either: thatthe complaint was unfounded andthe file should be closed; or, thatcharges were warranted.The investigator then presentedthe investigation report to the IC,defending his/her reasoning andconclusions. The discussion is usuallyintensive; never a simple ‘rubberstamp’ process. The committeethen voted on whether to accept orreject the conclusions of the investigation.Based on the committee’sdecision, you were charged, and acharge letter was sent to you. Sowhat now?The charge letter specifies thecharges against you and the rationalefor those charges. It is essentiallya full explanation of the casethat IC will present at the Adjudicatinghearing. This is an excellentresource for you to use in decidingwhether to challenge your case infront of the Adjudicating panel. Youshould review it in detail beforemaking your decision to accept theconditional guilty plea or go to theformal hearing.If you request a formal hearing, itwill proceed as outlined in our Regulations,which are available on theAIC web site at www.aicanada.ca/e/resourcecenter _ document.cfm. Theinvestigator will be well-prepared forthe Adjudicating hearing. He/she hasspent hours going over your reportand has already defended his/herconclusions to the IC. Therefore, ifyou feel that the charges against youare not warranted or excessive, youmust be equally well-prepared forthe Adjudicating hearing. How?There are two things you can doto ensure that you are as ready aspossible for the hearing. First, goback to the charge letter. It summarizesthe entire case against you.You should review it in detail and be

prepared to thoroughly discuss all ofthe points it raises. Second, reviewthe Regulations. They spell out indetail the process and procedure ofan Adjudicating hearing, who will bethere, how it is to be conducted, whatwill be discussed, etc. Going throughthese two steps will help you be preparedfor the hearing. Although thissounds like a simple two-step process,it will be anything but simple.To be properly prepared, each stepwill entail hours of study, analysis andpreparation on your part. The moreyou are prepared to defend yourself,the better your outcome. Remember,the investigator is an appraiser, justlike you. In addition, the Adjudicatingpanel members are also appraisers,just like you.After the hearing is completed, adecision will be rendered by the Adjudicatingpanel. If you are charged,costs will be levied against you. Youand/or the IC may appeal the decisionof the Adjudicating Committee. Ifthe decision is appealed, the Appealhearing will not be a rehash of thecomplete hearing; rather, it will focuson the points raised in the appeal.The Appeal hearing procedure wouldbe similar to the Adjudicating hearing.Investigating CommitteeDavid Gabruch, AACI, P. App– Chair(306) 933-7682dgabruch@agr.gov.sk.caDoyle Childs, AACI, P. App(250) 753-3428doyle@crisland.comTrent Gelmici, AACI, P. App(780) 723-7444/485-0225info@wcpsi.comDeana F. Halladay, CRA(204) 981-1390DeanaH@mts.netMichael Lee, AACI, P. App(905) 577-0403michaell@ellens.on.caNow you know how to properlyhandle yourself at an Adjudicatinghearing. Let’s hope you never haveto put this to use.Michael J. Mendela, AACI, P. App(905) 852-9986m.mendela@sympatico.caDemitry Omrin, AACI, P. App(416) 322-7888Demitry.omrin@recg.caMike Schulkowsky, AACI, P. App(306) 777-7807mschulkowsky@regina.caDel Stebner, CRA(403) 346-5533del@soderquist.ab.caSheldon Rajesky, AACI, P. App(905) 709-9595srajesky@rejeskyappraisals.comC a n a d i a nAppraiserE CVolume 51 • book 3 • 2007 valuateura n a d i e n 37

A d j u d i c a t i n gB y A l a s d a i r K . G o r d o n , A A C I , P. A p pM e m b e r , A d j u d i c a t i n g C o m m i t t e eFacing an AdjudicatingCommittee hearinghis article is offered toaid members who chooseto attend an AdjudicatingCommittee (AC) hearingto answer charges brought bythe Investigating Committee (IC).It should also help dispel somecommon misconceptions aboutthe Professional Practice committeesand how hearingsare conducted.Let us be quite clearthat the IC and the ACare two entirely independentAIC ProfessionalPractice committees.While this may be obviousto most members, it isapparent in many hearingsthat the memberscharged view thedeliberations of38C a n a d i a nAppraiserVolume 51 • book 3 • 2007EvaluateurC a n a d i e nthe AC and its decisions as nothingmore than a rubber stamp forthe charges and discipline recommendedby the IC. Nothing could befurther from the truth.The IC investigates complaintsand, if considered to be warranted,lays charges andrecommends discipline of amember. The member cansign a conditional guiltyplea (which is still subjectto the approval of theAC) or choose to attenda hearing of the AC. Afterreviewing evidence at thehearing, it is the AC thatwill decide whether or notthe charges are provenand the disciplineappropriate.If the member chooses to attenda hearing, here is some advicethat may make the procedureless daunting.Although it should not be necessaryto state the obvious, turning uplate for the hearing is not advised.While it may not be viewed as beingin contempt, it displays a lack ofrespect for the process. Generally,the panel will wait about 15 minutesand then the hearing will proceed,with or without the member.Prior to the hearing, the memberwill receive a binder containing theappraisal report, all the correspondencebetween the parties, and theIC’s charges and the discipline itproposes to recommend to the ACfor its deliberation. The member hasthe option of being assisted at thehearing by legal counsel, however, ifthat option is exercised, then the ICwill also be represented by counsel– usually a lawyer who is experiencedin these hearings.Over the years, it has been theopinion of the AC that, for the mostpart, unless the member’s counselis particularly familiar with theStandards and Regulations of theInstitute, he or she rarely furthersthe member’s defense. In the hearing,we strongly recommend thatthe member focus on the chargesand discipline recommended. Itis apparent that many members,even before attending a hearing, failto re-familiarize themselves, evenbriefly, with the Institute’s Standardsand Regulations. Frequently,the member uses the hearing toproceed into a long history of thefile, which, in all likelihood, will have

no bearing on the charges beingbrought. The members of the panelwill have reviewed the binder longbefore the hearing, and will be veryfamiliar with its contents.At the hearing, it is not uncommonfor the member to feel victimized.The report may have beensubmitted by a third party, perhapsanonymously. Nonetheless, thecomplaint must be investigated.Although the member may evenstate that the client is completelysatisfied with the appraisal report,this will have no bearing on theinvestigation or the decision of theAC. Put simply, the appraisal reportmust meet the standards requiredby the Institute; and further, a satisfiedclient is no defense.The AC is well aware that theinvestigative process is protractedand can be an unpleasant experience.The subsequent hearingcan be stressful and the panelstrives to help the member feel asat ease as possible. However, itdoes not serve the interest of themember well if he or she choosesto be belligerent or evasive duringthe hearing. Over the years, thepanels have been subjected tomany intemperate comments suchas “The committee is wasting mytime and I have better things todo.” This type of comment is insultingto members of the ProfessionalPractice committees who may,themselves, have better things todo, but choose instead to volunteertheir many hours of service tothe Institute.There is only a limited amountof time that can be allowed for anAC hearing. Therefore, the memberis strongly advised, as in all courtsof law, to be punctual, prepared,pertinent, and polite. The Institutebelieves that the process shouldbe a learning process rather thana punishment. Accordingly, bothcommittees view an educationalrequirement as part of the disciplineimposed to be a critical partof this process. Often, this willinvolve ordering the member tosuccessfully attend the StandardsSeminar, a related course, or both,within a required period.Adjudicating CommitteePeter Lawrek, AACI, P. App - Chair(306) 791-7662peterlawrek@crownappraisals.comDavid Aberdeen, AACI, P. App(250) 380-0933daa@aberdeens.caPat Cooper, AACI, P. App(403) 215-1051pat.cooper@outlookrealty.caAlasdair Gordon, AACI, P. App(604) 683-5591alasdair@carmichaelwilson.comRolf Halvorsen, AACI, P. App(780) 483-5250rolf@halvorsen.caJohn Ingram, AACI, P. App(902) 835-5383jingram@ingramvarner.comMichael Wootton, AACI, P. App(416) 221-1200 x1180Michael.wootton@altusgroup.comC a n a d i a nAppraiserE CVolume 51 • book 3 • 2007 valuateura n a d i e n 39

F r o m t h eC o u n s e l l o r ’ sD e s kB y R o b e r t P a t c h e t t , L L . B , C D ,A I C C o u n s e l l o r ,P r o f e s s i o n a l P r a c t i c eEthics and business valuesaffect your bottom linen matters of ethics, you shouldconsider how you choose to actand whether you are aware thatyour actions often influence yourreputation and your bottom line. Whenconducting business, you quote for anassignment; indicating when it will becompleted, and how much it will cost.If you discover that your costs aregoing to be higher than anticipated,you have the choice of completingthe assignment at the quoted cost orasking for additional money.40C a n a d i a nAppraiserVolume 51 • book 3 • 2007EvaluateurC a n a d i e nIf you realize that you cannot completethe appraisal on time, you shouldprovide your client with a revised estimateof the completion date.Both these approaches soundsimple and reasonable and, yet, Icontinue to receive inquiries on theseissues. In the valuation marketplace, ifyour appraisal reports are going to beconsistently late, you will not stay inbusiness very long. The same applies ifyou tend to bid low and charge higherfor unexpected costs.That being said, there are validreasons for appraisal reports takinglonger than anticipated and incurringunexpected costs. How you chooseto address these situations with yourclients is a matter of your ethics andbusiness values. In all cases, theideal solution is to keep your clientsinformed. This will permit them toadjust their own timelines, and businessdecision-making accordingly.For example, it is wise to advisethe lender/client that, because of theunique nature of the property, it is difficultto find comparables, that you needmore time to research zoning restrictions,and that you will be providinga revised cost estimate and timeline.The lender/client can then advise theproperty owner and their own managerof the delay. Because everyone isaware of the delays, your credibility isnot impacted.Alternatively, when you fail to stay intouch with your client, a property ownerwill frequently attempt to contact you.When you avoid the calls, he or shebegins to question your ethics and businessvalues, and that is when everyoneinvolved – the lender, mortgagebroker, spouse, business partners, andemployees – will start to hear aboutyour failure to deliver. By the time theycall me, there may be at least a dozenothers who have been told not to useyour services – all because of a failureto keep your client apprised of thestatus on a file.When you choose to act in aprofessional and ethical manner, itserves as a cornerstone for the successof your business, and your reputation,which, in turn, will always add value toyour business.

uestGc o lu m n ST E C H N O L O G YB y K e v i n W a l t o n , C F AV P O p e r a t i o n s , S o l i d i f iResidential real estate appraisalin the age of technologyechnology has permeatedall aspects of modern lifeand, it is changing the realestate appraisal industryin dramatic and exciting ways. GPSmapping systems help to quicklyfind subject property locations andcomparables. Laser measuring toolsand computer-based sketching alongwith wireless connectivity expeditesthe physical inspection chore.Mobile communications allow morefield time and reduce overhead costsof fully staffing an office. As in mostbusinesses, time is money, andlenders and brokers are no exception.With the advent of automatedunderwriting, the mortgage processhas sped up significantly, andlenders are seeking appraisal turnaroundsthat match the competitivenature of the mortgage businesstoday. The ability for appraisers toproduce reports in a shorter amountof time, without sacrificing quality,has become a key success factor forappraisers seeking continued businessgrowth in today’s market. Afast response to the client appraisalrequests, prompt booking of borrowerappointments, and swift submissionof complete and accuratereports will pay dividends in repeatbusiness from happy, loyal clients.Not only can technology add to anappraiser’s productivity, it can alsohelp drive new business. Many inthe appraisal profession are takingadvantage of referral services anddirect marketing campaigns over theinternet to connect with customers.New service forums or networks nowoffer customers the ability to filterand match products and providers byNot only can technology add to an appraiser’sproductivity, it can also help drive new business.risk criteria, geography and pricing.The introduction of new and innovativetechnology platforms in themortgage and appraisal industriesnow incorporate intelligent matchingof customer requirements, aidinglenders in the art of balancing risk,time constraints, and cost. Theseplatforms, such as Values offeredby Solidifi, streamline the order fulfill-42C a n a d i a nAppraiserVolume 51 • book 3 • 2007EvaluateurC a n a d i e n

ment process through technology,and offer electronic payment optionsto lenders, brokers and borrowers,eliminating the need for the appraiserto invoice the broker/lender, or to collectfunds at the door.As a valuation professional, someforms of technology can seem likemore of a threat than an asset. Theincreasing acceptance of AVM (automatedvaluation model) technologieshas eroded a portion of the valuationproduct market traditionallyperformed by accredited appraisers,but there are some inherentweaknesses with AVMs that leaveopportunities for the savvy valuationprofessional. For example, for propertieslocated where the data is notavailable, which are of poor quality,or where the result of the AVM is notsatisfactory, the lender will turn toa more thorough traditional form ofvaluation service.AVMs will never be robust enoughto handle properties that do notfit the conventional mold, such asluxury properties, multi-family residences,and properties in distressdue to delinquency. These casesare more complex and, therefore,require qualified professionals thatcan adapt the level of due diligence,and ensure that this work effort iscommensurate with their pricing.While AVMs have received muchattention over the past decadeas the most significant applicationof technology in the mortgageappraisal industry, materialadvances have been made that havealso positively impacted appraisers.Consider the following categories,which include some of the mostpopular areas where technologyis permeating today’s traditionalappraisal practice.Field tools:Measuring toolsMapping and locator toolsSketching toolsComparables searchTablet PCsReport preparation:Form templatesDigital photographyElectronic signaturesAuthentication and securityBack office:Customer managementCRM softwareOrder receipt, status and deliveryAppraisal records managementBilling automationAs the appraisal industrygrows and evolves, so willtechnology. Work smartly andtake regular inventory of yourappraisal practice by examiningthe areas where you may be ableto increase your revenue, whileleveraging technology to reduceoperational costs. Embracingchange and staying ahead ofthe curve may take some timeand dollar investment today,but can reap dividends for yearsto come.C a n a d i a nAppraiserE CVolume 51 • book 3 • 2007 valuateura n a d i e n 43

AIC designations granted / Désignations obtenues de l’ICEThe Appraisal institute of Canada (AIC), together with the provincial associations and the provincial bodies affiliated with the AIC,commend the following members who completed the rigorous requirements for accreditation as a designated member of the AICduring the period April 19 to July 13, 2007:L’Institut canadien des évaluateurs (ICE), en collaboration avec les associations provinciales et les organismes provinciaux affiliésà l’ICE, félicitent les membres suivants qui ont complété le programme rigoureux d’accréditation à titre de membre désigné del’ICE durant la période du 19 avril au 13 juillet 2007:AACI, P. AppAccredited Appraiser Canadian InstituteThese members are congratulated on the successfulcompletion of all AACI, P. App designation requirements.We welcome these individuals as fully accredited membersof the Institute through the granting of their AACI, P.App designation.Nous félicitons ces membres pour avoir complété avecsuccès le programme menant à la désignation AACI P.App. Nous les accueillons comme membres pleinementaccrédités de l’Institut et leur accordons avec fierté ladésignation AACI, P. App.AlbertaTerry B. CoxSaskatchewanKaren ParmarOntarioChris R. ChornohosPrinceEdward IslandTodd W. MacDonaldCRACanadian Residential AppraiserThese members are congratulated on the successfulcompletion of the CRA designation requirements.Nous félicitons ces membres pour avoir complété avecsuccès le programme menant à la désignation CRA.AlbertaJim T. CrewsEva KaitmanSteven William KibseyDena-Lynn M. KnoppBritish ColumbiaRobert BugeraJoan I. ChislettPeter HugdahlRaymond W.M. HuiTara JonesAli MirzaeiSherry WondgaJennifer WoodManitobaValerie JonssonCraig J. WhitmanNova ScotiaPaul L. BeazleyWilliam T. BestJohn E. MurrayOntarioJoel BeauregardMurray J. BechtelGertrude M. GarbensMarie E. GarbensCarole Anne LandryCatherine A. MartinJeffrey Joseph PetruzellaSusan M. PietzJoseph E. PriamoSaskatchewanDean NotschaeleAdam VanjoffCandidates / StagiairesAIC welcomed the following new candidate members during the period April 19 to July 13, 2007:L’ICE souhaite la bienvenue aux personnes suivantes qui ont joint les rangs des membres stagiaires durant lapériode du 19 avril au 13 juillet 2007 :AlbertaWilliam Mitchell BishopChristina M. GalavanGarry W. WoodMichael Brent LevallXufeng LiPushpinder S. MinhasDevin PalmerJeff G. PredigerShawn RozarioBritish ColumbiaColin D. HoldenerChase MelnychynGurinder S. SekhonGwendolyn S. TeichroebStephanie Ursala TongP. Simon WainwrightNova ScotiaBeverly A. BucklandMarcel A. D. ParsonsOntarioJaqueline M. BolandGabriel I. CrowderPeter James CudmoreJames JiangIvy K. LoCameron A. McAlpineAngela L. OliveiraIryna PuhaAnita SengsavangNathan S. StienstraCurtis Alvon TravisSimon Z. XieQuebecSettimio VelenosiStudent / ÉtudiantThis new category of membership was implemented January 1, 2007 and now serves as the first step on the path todesignation for those completing their requirements for Candidate membership. Students considering the appraisalprofession as a career option are also welcomed to this new category of membership.Cette nouvelle catégorie de membre entrait en vigueur le 1er janvier 2007 et constitue la première étape sur la voie dela désignation pour ceux qui s’affairent à compléter les exigences de la catégorie de membre stagiaire. Les étudiants quicontemplent une carrière comme évaluateur professionnel sont bienvenus à joindre cette nouvelle catégorie de membre.ONTARIOShannon Souliere44C a n a d i a nAppraiserVolume 51 • book 3 • 2007EvaluateurC a n a d i e n

2006/07 Bursaries and AwardsOver the last several years,the Appraisal Institute of Canada(AIC) has introduced a series ofacademic awards that recognizethe achievements of studentsundertaking appraisal studies inprograms delivered through AIC’spartners in professional education.University of British ColumbiaAppraisal Instituteof Canada BursaryA bursary of $1,000 is offeredby the AIC to an undergraduatestudent specializing in the RealEstate Division of the Facultyof Commerce and BusinessUniversité de Québec à MontréalAdministration. The recipient for2006-2007 is Peter Coppard ofVancouver, British Columbia.Appraisal Institute of Canada PrizeA $500 prize is awarded annuallyto the student receiving the highestBourse de l’Institutcanadien des évaluateursA gift in the amount of $1,000 is presentedannually to the student receivingthe highest standing in ‘les coursd’évaluation approfondie’ offered atstanding in BUSI 330 offered bythe Real Estate Division, SauderSchool of Business. The 2007winner is Chad Thiessen of PlumCoulee, Manitoba.Chaire SITQ en immobilier at UQAM.The 2006 recipient was NathalieHudon of Longeuil, Quebec.Seneca College, TorontoThe Appraisal Instituteof Canada AwardAn annual award in the amount of$500 is presented to a graduatingstudent in the Real Property AdministrationProgram (RPA) who has,in the opinion of a Seneca facultypanel, demonstrated academic excellencein RPA 112 and one or more ofthe additional AIC curriculum coursesat the College, has an active interestin the field of real property as acareer, and has made valuable contributionsto the classroom environment.The 2007 award was presented toAaron Harlang of Toronto, Ontario.Jack Warren Education Trust Conference AwardsNew this year, two AIC conferenceregistrations are awarded toselected Jack Warren Trustrecipients. These are in additionto the scholarships and bursariesawarded annually when meritedby the Trust. The winners of theconference registrations arerandomly drawn from the namesof all past J. Warren EducationTrust recipients who are currentAIC members in good standing.The 2007 winners were SamanthaSawyer of Vancouver, BritishColumbia and Laina Chwelos ofFort McMurray, Alberta.Applicants wishing to be consideredor anyone wishing to make a taxdeductible donation to this trustshould contact the BC Association ofthe Appraisal Institute of Canada at604-266-8287 or visit the web site atwww.appraisal.bc.ca under the headingsPublications and then Brochures.C a n a d i a nAppraiserE CVolume 51 • book 3 • 2007 valuateura n a d i e n 45

Streams, Currents and New Waves…AIC 2007Conference recapThe 2007 Appraisal Institute ofCanada conference held at theWestin Bayshore Hotel in Vancouverfrom June 6 - 9 was extremelysuccessful. Over 700 delegates,speakers, exhibitors, companionsand invited guests converged onVancouver for what proved to be ahigh quality, well-regarded educationprogram, with great networkingopportunities for all.The conference started off witha bang…on a drum that is…asdelegates gathered for the openingceremony featuring the Drum Café.The Drum Café is a unique and rousingcommunication and group buildingexercise that certainly providesa rousing way to start a conference.The conference also featuredsix informative, entertaining andthought-provoking keynote speakersto start and finish each day.Some conference speakers havegraciously provided copies of theirPowerPoint presentations, handoutsor other materials which werepresented or discussed during theirsessions. The AIC 2007 conference‘eLibrary’ is available byvisiting www.aicanada.ca/e/aic2007/elibrary.html.Two very importantevents were also heldduring the Vancouverconference, including thesigning of a Memorandumof Understanding (MOU)between AIC and PublicWorks and GovernmentServices Canada(PWGSC). The MOUoutlines an agreementbetween the twoorganizations to shareinformation and consultwith one another onrelevant topics. AIC wasalso pleased to make adonation in the amountof $10,000 to Habitatfor Humanity on behalfof all of the conferencespeakers who participated inthe conference.AIC extends a very special thankyou to 2007 Conference co-chairsCraig Barnsley, AACI, P.App and KelvinIncoming AIC President Gordon Tomiuk, AACI, P. App (R)presented a $10,000 cheque on behalf of the Instituteto James Lippert, National Board Member for Habitatfor Humanity. Conference speakers generously donatedtheir time and effort in presenting at the conferenceand, in recognition of that, AIC was pleased to providethis generous donation on their behalf.Coley-Donohue, AACI, P.App, their conferencechairs and the tireless groupof volunteers who dedicated their timeand effort into making this the successfulAIC conference that it was.Photograph by Daniel Stone, Stone PhotoThank you SponsorsThe Appraisal Institute of Canada Conference would not be possible withoutthe generous support of many organizations. Thank you to the followingorganization who supported the Vancouver Conference:Education Partner ($35,000)Real Estate Foundation of British ColumbiaDiamond Sponsors ($10,000)Altus HelyarBC AssessmentCampbell & Pound Ltd.Colliers InternationalHVS InternationalPlatinum Sponsors ($5,500)BCAAIC ~ Vancouver ChapterCushman & Wakefield LePageMarshall & SwiftMartin Merry & Reid Ltd.Realm Business SolutionsGold Sponsors ($3,500)Burgess Cawley Sullivan & AssociatesCanada Mortgage & Housing CorporationDeloitte and ToucheFarm Credit CanadaGrover, Elliott & Company Ltd.Interbay Funding CorporationWestern InvestorSauder School of Business,University of British ColumbiaSilver Sponsors ($2,500)British Columbia Association of AICCarmichael Wilson Property ConsultantsCunningham & Rivard AppraisalsFirst Professional Liability Insurance CompanyHooker Craig Lum Garnett Real Estate AdvisorsMiller Thomson LLPNiemi LaPorte & Dowle Appraisals Ltd.SCM Adjusters Canada(Leonard French & Co.)Universal AppraisalsBronze Sponsors ($1,000)BCAAIC ~ Victoria ChapterCentract Settlement ServicesCraig Kelman & AssociatesGHW Appraisals Northwest Ltd.National Appraisal GroupNationwide Appraisal ServicesParkes & Company Ltd.Real Estate Institute of BC46C a n a d i a nAppraiserVolume 51 • book 3 • 2007EvaluateurC a n a d i e n

RecognizingExcellenceThe Appraisal Institute of Canada(AIC) Annual Conference, held June6-9 in Vancouver, British Columbia,provided the occasion for the AIC torecognize a number of individualsand organizations for contributions tothe Institute, in particular, and to thevaluation profession, in general.FellowsThe title of Fellow is granted to designatedmembers who have distinguishedthemselves by their exemplarycontributions to the profession.This is demonstrated by a high levelof excellence and achievement thathas contributed to the advancementof the profession.David Babineau, AACI, P. App,of Fredericton, New Brunswick, wasawarded the title of Fellow. David wasnominated for this honour by the NewBrunswick Association of Real EstateAppraisers for his significant contributionat both the national and provinciallevel, over 25 years of membershipin AIC. In particular, the nominationrecognized his commitment to continuousimprovement of the professionalpractice system, and his role as adedicated Standards Seminar instructorand as a mentor to candidatesover the course of his career.Past President Paul Olscamp,AACI, P. App was also named aFellow of the Institute.Presidential CitationsOutgoing President, Paul OlscampAACI, P. App (Fellow) awarded a presidentialcitation to Michael Garcelon,AACI, P. App. The Presidential Citationis awarded by the Institute torecognize, in a meaningful way, anindividual or organization who hasmade a significant contribution tothe growth and enhancement of theappraisal profession. In presenting thecitation to Michael, President Olscampmade particular note of his leadershipin the areas of branding, marketingand communications in his role as afounding member and then Chair ofthe Communications Committee.Retiring Board MembersThe following retiring Board memberswere presented with certificatesrecognizing their contributions duringtheir tenure on the Board of Directors:AIC President Gordon Tomiuk, AACI, P.App (R) presented Past President PaulOlscamp, AACI, P. App with a Fellowshipand a ceremonial gavel to mark the endof his term.AIC Past President Paul Olscamp, AACI,P. App (R) presented Mike Garcelon,AACI, P. App of Saskatchewan with aPresidential Citation in recognitionof his dedicated work on behalf of theInstitute and its members.Photograph by Daniel Stone, Stone PhotoDavid Highfield,AACI, P. App, and (Fellow)Terrence Kerslake,AACI, P. AppMichael Garcelon, AACI, P. AppRoland Mayr, AACI, P. AppLaurent Brosseau, AACI, P. AppMr. Brosseau received special mentionfor his long service to the Institute,as he had just that week marked the20 th anniversary of his first appointmentto the Board of Directors.Photograph by Daniel Stone, Stone PhotoSITQThompson Dorfman Sweatman LLPUBC Centre for Urban Economics & Real EstateWm. S. Jackson & AssociatesContributors (~$500)BCAAIC ~ Fraser ValleyBCAAIC ~ Kamloops ChapterBCAAIC ~ Kootenay ChapterBCAAIC ~ Northwest ChapterBCAAIC ~ Okanagan ChapterBCAAIC ~ Prince George ChapterCanadian Pacific RailwayNoram Assessment GroupReal Estate Institute of CanadaThank you ExhibitorsThe following companiesparticipated in the trade showat the 2007 AIC Conference:A Bound CorporationBC AssessmentCampbell & Pound Ltd.Colliers InternationalInterbay Funding CorporationMarshall & SwiftNotariusSolidifiThe PersonalPublic Worksand Government Services CanadaREACSSauder School of Business,University of British ColumbiaSt. John’s 2008 Conference2008 AppraisalInstitute of CanadaAnnual ConferenceDelta St. John’s, St. John’s,Newfoundland & LabradorJune 4 - 7, 2008See you there!C a n a d i a nAppraiserE CVolume 51 • book 3 • 2007 valuateura n a d i e n 47

MEMBER DISCIPLINEDTHE APPRAISAL INSTITUTE OF CANADA advises that Colin Best, CRA,of Milton, ON, has been found in contravention of the Institute’s Codeof Ethics and Standards of Professional Practice; in relation to appraisalreports prepared in 1999 and 2000. The sections contravened are:Regulation No. 1: (dated November 22, 1997):Ethical Rule: 1.1 (a, b); 1.3 (a, c, d, g); 2.1; and 6.1.The member completed two appraisal reports on a property that containeda commercial component without having the reports co-signed by anAACI, thus violated numerous ethical rules.As a result of this conduct, Colin Best, CRA has been given the disciplineof Censure and has been directed to attend the Standards Seminar providedby the Appraisal Institute of Canada. Also, pursuant to the ConsolidatedRegulations of the Appraisal Institute of Canada, costs have been levied.Do you havecomments orquestions?If you have comments or questions,please send your letters to AIC:403 – 200 Catherine Street,Ottawa, Ontario, K2P 2K9or email joannec@aicanada.ca.Not all letters received can bepublished or answered. Thosepublished may be edited for space,clarity, grammar and spelling.Critical datesThe following dates are provided as a reminder to AIC members of criticaldates throughout the year pertaining to CPD credits, dues and insuranceobligations.January 1, 2006August 8, 2007September 30, 2007October 1, 2007November 5, 2007December 31, 2007July 31, 2008Candidates required to complete one courseper year, but given grace period in which toenroll and complete first course.Dues invoices mailed to members.Deadline to complete current CPD cyclerequirements.Membership dues payment due date.Insurance Levy billings mailed to members.Insurance Levy payments due to SCM AdjustersCanada Ltd. (204) 985-1775.Candidates’ first deadline to report coursecompletion.i n m e m o r i a mhe following membersof the Appraisal Instituteof Canada have passedaway. On behalf ofeveryone connected withthe Institute and the profession, weextend our sincerest sympathies totheir families, friends and associates.48C a n a d i a nAppraiserVolume 51 • book 3 • 2007EvaluateurC a n a d i e nLes membres suivants de l’Institutcanadien des évaluateurs sontdécédés. Au nom de tous ceux quioeuvrent de près ou de loin au seinde l’Institut et de la profession,nous exprimons nos plus sincèrescondoléances à leurs familles, amiset associés.Donald Andrews, AACI, P. AppVancouver, BCEd Cheung, AACI, P. AppVancouver, BCA.Edward Knighton, AACI, P. AppNewmarket, ONCarol Weeks, CRASault Ste. Marie, ONGerald I. M. Young, AACI, P. AppToronto, ONJoseph Martin, CandidateStratford, PE

By David Enns, AACI, P. App& IMPERFECTINFORMATIONIntroductionWhen real estate appraisers writean appraisal report, they definemarket value for their client asbeing “the most probable pricewhich a property should bring ina competitive and open market,as of the specified date, under allconditions requisite to a fair sale,the buyer and seller each actingprudently and knowledgeably, andassuming the price is not affectedby undue stimulus.” 1 [emphasisadded]Competitive marketsThe above are some of the conditionsthat economists include aspart of a competitive market. Inthe model case, a perfectly competitivemarket is one where thereare enough buyers and sellers thatnone, acting alone, can influenceprice. Each market participant istoo small to affect any change onprice and it assumes that there isno price fixing or collusion on thepart of sellers. It also assumesthat, because the product is identicalfrom one seller to another,a buyer can find a perfect substitutefrom any one of a number ofalternative sellers. Finally, it alsoassumes there is complete information,which is the main subjectof this article.The main result of a perfectlycompetitive market is that thereis allocative efficiency. This isthe situation that occurs when noresources are wasted – when noone can be made better off withoutsomeone else being made worse off.What perfect markets do for us is toadjust production and consumptionbetween different products until nofurther gains could accrue to eitherproducers or consumers from anyother combination of goods. Thisis the essence of allocactive efficiencyand is a major characteristicof perfectly competitive markets.All of the adjustments necessary toachieve allocative efficiency occurautomatically through changes inmarket prices and company profits.In such a system, there is noneed for government interventionof any kind. This is the strength ofthe market economy that led AdamSmith to advocate the doctrine oflaissez faire. 2Efficient marketsThe market that is briefly describedabove, in which the actual priceembodies all currently available relevantinformation, is called an efficientmarket. In an efficient market,it is impossible to forecast changesin price. This is so because, if yourforecast is that price is going to risein the next period, you will buy now(since the price is low today comparedto what you predict it is goingto be in the future). Your action ofbuying today acts like an increasein demand today and increasestoday’s price. As other market participantsdo the same, then today’sprice will rise until it reaches theexpected future price. Only at thatprice do traders (think of the stockmarket) see no profit in buying moreof the item (stock) today. There isan apparent paradox about efficientmarkets. Markets are efficientbecause participants try to make aprofit by buying at a low price andselling at a high price. However, theact of buying and selling to make aprofit means that the market pricemoves to its expected future value.Having done that, no one, noteven those who are seeking to makea profit can predictably make aprofit. Every profit opportunity seenby a market participant leads to anaction that produces a price changethat eliminates the profit opportunityfor other participants. 3As we shall see, property marketsare not efficient for a varietyof reasons.Imperfect marketsThere are five situations when themarket does not, on its own, reachalloactive efficiency. These scenariosare described by economists asmarket failures. They include marketsthat produce externalities, themonopolization of certain markets,markets that under-supply publicgoods, markets that are sometimesunstable, and markets with imperfectinformation. In such circum-50C a n a d i a nAppraiserVolume 51 • book 3 • 2007EvaluateurC a n a d i e n

“there is an important role for professionals, such asreal estate appraisers, who can provide their clientswith informed opinions of property market value.”stances, if the market is left alone,either too much or too little is produced.Virtually all of these failurescan be seen in property markets.Markets sometimes producenegative externalities. These areexternal costs borne by third partiesrather than by market participants.The smoke pollution from a nearbyfactory that causes additional cleaningcosts on homes in close proximityand results in lower propertyvalues is a clear example of a negativeexternality. 4In these instances, if the marketis left alone, ‘too much’ of thesmoke (the negative externality) isproduced by the market and, therefore,there is a justification for someform of government intervention.Markets sometimes becomemonopolized and, in theseinstances, ‘too little’ is produced bythe market (and, of course, at toohigh a price). There is an inherentelement of monopoly in land ownership,due to the scarcity of land. Inan interesting account of ‘scarcity’of location, Tim Harford in his bookThe Undercover Economist has aninteresting discussion concerning thehigh price ($2.55) of a Starbuck’stall cappuccino (with an ingredientcost of perhaps five cents) atLondon’s Waterloo Station, where74 million people pass through eachyear. Harford explains that the priceis high because of Starbuck’s enviable(scarce) location and by thefact that other coffee vendors areexcluded by the landlord. 5If left alone, markets sometimesdo not produce public goods or atleast not enough of them. Publicgoods in economic terminologyare peculiar goods that have threeunusual characteristics: they arenon-excludable, non-divisible, andnon-depletable. Consider a largeurban park like Stanley Park inVancouver. The park is open to allcity residents and it would be difficultto exclude some residents andnot others. For users of the park,it matters little whether one or ahundred picnickers or joggers (nondivisible)use the park on a sunnyafternoon. Finally, the park doesnot get used up after a weekend ofevents is over (non-depletable). 6 Ifparticipants cannot be excluded, theprivate market cannot make a profitsupplying such a good. Therefore, itwill under-produce the service and‘too little’ is provided by the privatemarket place. It is a failure of supplyand it is the reason why local governmentswill usually require that acertain amount of open space beset aside for public use as a conditionfor residential developmentto proceed.Markets are also sometimesunstable. Agricultural commoditymarkets have often exhibited thisproblem. Bad weather may reducea crop of corn resulting in a higherprice. Reacting to the higher price,farmers rush to grow more cornnext season, however, the extrasupply then drives down the price,and so it goes from ‘too much’ to‘too little’ being produced. 7 Farmlandprices can then fluctuate asa result of this instability. This issometimes described as the failureof co-ordination. However, it is notonly agricultural markets that exhibitthis tendency. The business cycle,with its boom and then recession,reflects this problem, as can thehousing market.Imperfect informationMissing information is the fifthmarket imperfection or marketfailure. Participants in markets maynot be as perfectly informed as thecompetitive model assumes.For example, in property marketsat the periphery of urban growth,developers deciding how to developsites must guess at the growth rateof the area in the foreseeable futureand then attempt to estimate thebest use of land within that set ofexpectations. If they develop at lowdensity, and if the city expands morerapidly due to population growth,then they may waste land in thesense that, had their expectationsand those of their buyers been correct,they could have gained a higherreturn over time from a higher densitydevelopment. Alternatively, if developersbuild at a high density and thecity spreads out due to transportationC a n a d i a nAppraiserE CVolume 51 • book 3 • 2007 valuateura n a d i e n 51

improvements, with land values tendingto be steady (or even fall), theymay find that they wasted resourcesin the other direction.AsymmetricinformationMany markets are characterized byasymmetric information. Asymmetricinformation is a particular form ofimperfect information. Participantson one side of the market havemuch better information than thoseon the other side and this is sometimesreferred to as ‘insider information.’For example, borrowers usuallyknow more than lenders about theirrepayment prospects, sharecroppers(tenants) know more about theirwork effort and harvest conditionsthan the landowner, and home sellersgenerally know more about thenature of their properties than dobuyers. In some instances, buyersdo not get what they expect and,in other situations, almost identicalproperties do not sell for the sameamount. In these situations, marketoutcomes can be at odds with whatwe might expect.Some economists have arguedthat this problem is much biggerthan previously recognized and havecalled for much more governmentintervention in the marketplace.An American economist, GeorgeAkerlof, published a paper in 1970that described the problem of asymmetricinformation in the used carmarket. He showed that, even ifthe market was very competitive, itsimply cannot work if sellers knowa lot about the quality of their carsand buyers do not. 8 Using theexample of ‘peaches’ and ‘lemons’for used cars, Akerlof showed that,if sellers cannot recoup a fair pricefor their ‘peaches,’ they will onlyoffer ‘lemons’ and buyers will notoffer to purchase ‘peaches’ knowingthat they may only get a ‘lemon.’ Inthe end, only worthless lemons gettraded in such a market. Generalizingfrom this example, if somepeople know more than others aboutthe quality of the product, thensome high quality products may notget traded at all or at least not verymuch and thus the market failure.“professional real estate appraisersstill need to recognize and comment intheir appraisal reports on the fact thatproperty markets have imperfections.”Market reactionsOn the other hand, there havebeen counter arguments that theprivate market place can and willreact to overcome these informationimperfections. 9 Residentialhousing markets (like other propertymarkets) are markets with asymmetricinformation. The market hasreacted to this problem of asymmetricinformation in several ways.Real estate appraisers and homebuilding inspectors have often beenemployed to ascertain additionalinformation about a property forthe potential buyer or the seller.In the case of the appraiser, it hasbeen about the market value of thehome. In the case of the buildinginspector, it has been about thephysical condition of the residence.Sellers will also disclose the physicalnature of their homes through theuse of a Seller Property InformationStatement. 10 Similarly, participantson one side of the market think theycan gain information by utilizing theskills of a real estate agent. In themind of the home owner, the agentknows the market in order not to betoo high or too low with an askingprice, the agent is familiar withcompetitive listings, and might evenhave a prospective buyer at hand.In each of these ways, the marketis reacting to the problem of asymmetricinformation.As an aside, while the real estateagent would normally use this asymmetricinformation on behalf of theclient, this is not always the case. Inhis recent and popular book, Freakonomics,Steven Levitt describesa study that was conducted inthe Chicago housing market. Thestudy involved the sale of 100,000homes, with 3,000 of them beingowned by real estate agents. Thestudy showed that agents kept theirown houses on the market for 10more days than they did with theirclients’, and sold their own homesfor 3+% more than they got for theirclients’ homes. On a $300,000home, that premium was $10,000.The economic incentive on the partof the agent to not increase the listingperiod lies in the structure andincentive of the commission. Supposethere is a 6% commission splitequally between the seller and buyeragents and one half of their commissiongoes to the brokerage house.With a 1.5% commission on thesale of the house, the extra $150 tobe earned on the extra $10,000 istoo small an incentive for the agentto put in the extra time and effortrequired for the higher sale price. 11ConclusionsWhile there are certainly marketimperfections, none are peculiar toproperty markets.If there was perfect market information,market participants wouldhave all of the required informationto make informed decisions andthere would be no need for realestate appraisers, real estate agentsor building inspectors. Market participantswould already know all of aproperty’s attributes (good and bad),they would know what other propertieshad sold for, how long they tookto sell, and what those properties’attributes were as well.Of course, not all of this is knownby participants and, hence, there isan important role for professionals,52C a n a d i a nAppraiserVolume 51 • book 3 • 2007EvaluateurC a n a d i e n

such as real estate appraisers,who can provide their clients withinformed opinions of propertymarket value (not only current, butalso retrospective opinions).Contrary to some thinking, thereal estate market, as with othermarkets, has clearly reacted in anumber of ways in order to deal withthe problem of imperfect information(including asymmetric information).By using professional realestate appraisers, potential buyersand sellers can overcome someof the imperfect and also someof the asymmetric nature (‘insiderinformation’) of property information.Appraisers assist their clientsby uncovering as much informationabout a property as is reasonablypossible during the appraisalprocess. This activity starts with aproper site and building inspection,and continues with the investigationabout restrictions on title (such aseasements) and to the property’spast usage, including its recent saleshistory. It continues with a properanalysis of the property’s highestand best use, an analysis of relevantcomparable sales data, and a wellreasoned estimate of a property’smarket value.Notwithstanding the above,professional real estate appraisersstill need to recognize and commentin their appraisal reports on thefact that property markets haveimperfections.Each step ofthe appraisalprocess may haveits own limitation. Perhapsthere is no survey for the propertyor its boundaries may not be clear.Perhaps not all of a building can befully inspected. Sometimes there arefew comparable sales from which tochose and a lack of paired sales orother data to support adjustments(in a proper mathematical sense,the appraiser needs one morecomparable sale than the number ofadjustments being made). 12Pointing out such limitations inan appraisal report should make thereport more credible. While propertymarkets are not perfect, appraiserscan adjust to this reality with duediligence and, at the same time,assist their clients in making betterinformed decisions.Endnotes1. See Section 12.16.1, CUSPAP 2007,effective January 1, 2007, The AppraisalInstitute of Canada.2. Smith saw other benefits that include thecostless nature of such a system thatdoes not require government regulationand also individual economic freedom.3. For a more complete discussion ofefficient market theory, see NormanE. Cameron, Money, Financial marketsand Economic Activity, Addison-Wesley,1984, p. 321.4. Burning fossil fuels that add carbondioxide and other gases to the atmosphere,which prevent the escape ofinfrared radiation, resulting in what hasbeen called the ‘greenhouse effect,’ isprobably the biggest negative externalityof them all. On the other side, a positiveexternality results when an unintendedexternal benefit is created by anactivity. For example, a homeownercreates an attractive front yard filledwith spring flowers that are admired byjoggers and walkers alike. As an aside,much planning activity stems from thenature of these externalities.5. T. Harford, The Undercover Economist,Anchor Canada, 2005. Chapter1. Harford also discusses two othermarket failures in his book.6. Parks are not absolutely pure publicgoods because people can beexcluded with fencing and a park canget crowded (depleted) if it is toosmall. Since this paper is about propertymarkets, it has been included asan example of a public good. Moretraditional examples include lighthouses,national defence and thejustice system. Published informationis also a public good.7. The resulting unstable farm incomeis a key reason for the introductionof supply management in certainCanadian agricultural sectors such asthe dairy and chicken industries.8. Three economists (George Akerlof,Michael Spence and Joseph Stiglitz)won the Nobel Prize for economicsin 2001 for their analysis of marketswith asymmetric information.9. See T. Cowen and E. Crampton,Market Failure or Success, The IndependentInstitute, 2007 for a discussionof market reactions to some ofthese failures.10. This is not mandatory in all provincesin Canada, but probably should be.11. S. D. Levitt and S. J. Dubner, Freakonomics,Harper Collins Publishers Inc.,2005, p. 8 and pp 71-76. Levitt alsopoints out that the Internet is erodingthe real estate agent’s information advantage.12. R. H. Zerbst, A Caution on the Adjustmentof Comparable Sales, The RealEstate Appraiser, November, December1977.David Enns, B. Sc. (Agr.), MBA.,AACI, P. App is the presidentof Enns, MacEachern, Pace,Maloney & Associates Inc. Aretired professor of economicswho taught land resourceeconomics in the appraisal programat St. Lawrence College,he also taught economics forthe Appraisal Institute and theUniversity of Ottawa. He can bereached at: www.empm.ca.C a n a d i a nAppraiserE CVolume 51 • book 3 • 2007 valuateura n a d i e n 53

AICABBCONAppraisal Institute of Canada (AIC)AIC Board of Directors MeetingNovember 3-4, 2007 – OttawaFor further information: info@aicanada.caAlberta Association (AIC)Standards SeminarsFall 2007November 2-3 – Calgary November 14-15 – EdmontonAnnual Wine & Cheese Member Information NightsOctober 3 – CalgaryOctober 10 – EdmontonA heads-up for early 2008:Our 2008 Spring Conference and will be held in Banff, the firstweekend in March.Contact info@appraisal.ab.ca or (403) 207-7892 or go to www.appraisal.ab.caBritish Columbia Association (AIC)Standards Seminars - Tentative DatesSeptember 14-15 – Okanagan or KamloopsSeptember 21-22 – Lower MainlandOctober 19-20 – VictoriaNovember 23-24 – Lower MainlandThe registration form can be found at:http://www.appraisal.bc.ca/news _ events/index.php/listing/181Annual General MeetingSeptember 28, 2007 – 5:00 pmVictoria Marriott Inner Harbour, 728 Humboldt Street, Victoria, BCContact Kathy Porter info@appraisal.ab.ca, (604) 266-8287 or go towww.appraisal.bc.ca/Ontario Association (AIC)SeminarsSept 28-29 Standards TorontoNov 23-24 Standards TorontoSeptember 7A Commercial Inspection Walk-Through & Preparationand Participation in Examinations for Discovery &Cross-Examination, TorontoSeptember 14 Mold - Where, How, When and Why & Water - TheNew Realty Problem, KingstonSeptember 21 From MFP to Sponsorgate: Regulatory ChangesMean Business for Appraisers & Small Claims Court,TorontoOctober 26November 16Small Claims Court & Time Well Spent: A Guide toPersonal Organization and Self Management in aBusy Workplace, TorontoUpdate on the Law of R.E. Appraisers’ Liabilities &Public Sector Accountability, TorontoEducationBUSI 330 - SEPTEMBER 17 - NOVEMBER 1, 2007 - evening courseClasses will be held two nights per weekMonday & Thursday (6:30 - 9:30pm)registration deadline is August 20, 2007course fee $990.00 (includes materials, examination and GST)Contact Lorraine Rigas lrigas@oaaic.on.ca, (416) 695-9333 or go towww.oaaic.on.caMBNBNLNSPEIQCSKManitoba Association (AIC)Candidate’s ForumWednesday, September 5 – 10 am-Noon2.0 ‘Guaranteed’ CPD CreditsProfessional Practice:Addressing complaints & Who is your client?Wednesday, September 5 – Noon-4:00 PM4.0 ‘Guaranteed’ CPD CreditsRobert Patchett, LL.B, Professional Practice Counselor - AICWinnipegREALTORS® Association, 1240 Portage Ave. Winnipeg1st Annual Joint Golf Tournament and DinnerThursday, September 13, 2007Commercial Division of the WinnipegREALTOR® and the ManitobaAssociation of the Appraisal Institute of CanadaIf you cannot make it for golf, please join us for dinner only at $35+GST ppRegistration deadline: September 1, 2007$100 + GST Includes: Green fees, cart, lunch and dinner per personA Joint Meeting with MB, AIC members and the members ofthe Real Property Section of the Manitoba Bar AssociationWednesday, September 19, 2007Further details will soon be announced.Annual General MeetingWednesday, October 24, 2007Reception – 4:00 pm/AGM – 5:00 pmNorwood Hotel, Promenade A, 112 Marion St., WinnipegStandards SeminarFriday, April 25-Saturday, April 26, 2008Victoria Inn - 1808 Wellington, WinnipegInstructor: Allan Beatty, AACI, P. App, Kelowna, BCContact Lynne Smith Dark mbaic@mts.net, (204) 943-1177 or goto www.aimanitoba.ca/New Brunswick Association of Real Estate AppraisersAtlantic Region Appraisers ConferenceSeptember 14-16, 2007 – MonctonContact Executive Director nbarea@nb.aibn.com, (506) 450-2016or go to www.nbarea.org/main.aspNewfoundland Labrador Association (AIC)Contact Sherry House nfaic@nl.rogers.com or (709) 753-7644Nova Scotia Real Estate Appraisers AssociationContact Davida Mackay nsreaa@nsappraisal.ns.ca,(902) 422-4077 or go to www.nsappraisal.ns.ca/Prince Edward Island Association (AIC)Contact Suzanne Pater peiaic@xplornet.com or (902) 368-3355L’Association du Québec del’Institut Canadien des ÉvaluateursStandards SeminarsAugust 17-18 – DrummondvilleSeptember 7-8 – MontrealContact Ginette St-Jean aqice@qc.aira.com or (450) 454-0377Saskatchewan Association (AIC)Fall Professional Development ConferenceOctober 19, 2007 – ReginaContact Marilyn Steranka skaic@sasktel.net, (306) 352-4195 or goto www.skaic.org/Reaching our AdvertisersIf you are viewing an electronic version of this issue on the AIC web site,please click on these listings for active links to the advertisers’ web sites.A Bound Corporation Page 5 www.abound.ca 888-622-6863ACI 2, 3, 56 www.appraiserschoice.com 800-234-8727Business Information Group 20 www.ecologeris.com 887-512-5204Canadian Resource Valuation Group 40 www.crvg.com 780-424-8856Dr. Kenford Nedd’s Caribbean Stress Retreat 55 www.stressdoctors.com 800-506-0067Leica Geosytems 31 www.geosolution.com 800-559-6198Notarius 8 www.notarius.com 800-567-6703Personal Home & Auto Group Insurance 35 www.thepersonal.com/aicanada 888-476-8737Sauder School of Business 49 www.realestate.ubc.ca 877-775-7733Solidifi 43 www.solidifi.com 905-530-208554C a n a d i a nAppraiserVolume 51 • book 3 • 2007EvaluateurC a n a d i e n