Frequently Asked Questions

Property Appraisals

An appraisal is a formal opinion of value: prepared as a result of a retainer; intended for reliance by identified parties, and for which the appraiser assumes responsibility – as defined by Canadian Uniform Standards of Professional Appraisal (CUSPAP).

There are numerous reasons for to obtain a professional appraisal of your property:
Some of these include:
*Purchase financing
*Sales considerations
*Equity re-financing
*Fesibility studies 
*Taxation considerations
*Estate planning 
*Property tax appeals
*Litigation purposes 
...and more

We strive to complete every report in a time efficient manner while upholding a high standard of quality and integrity. Completion times vary depending upon the scope of the assignment and our current workload. When we receive an appraisal/report request we will quote what we feel to be a reasonable time frame for completion. As we do place a high value on client relationships, we will do our best to make sure that our timeline works with yours.

In short, no. An insurance appraisal will estimate the cost to re-build an existing building or development in the case of a complete loss. Replacement cost varies dependent on current trends within the construction industry and includes demotion and debris removal allowances and any potential bylaw upgrade costs. A market value appraisal will determine a value that represents the achievable sale price for a property on the open market. This value is based upon the three accepted approaches to property valuation: the Cost Approach, the Income Approach and the Direct Comparison Approach. Please refer to our resources page.

Phung Horwood appraisers either hold the AACI, P.App, designation or are  Candidate Members of the Appraisal Institute of Canada (AIC).

The following is an abstraction from publications by the Appraisal Institute of Canada.

The AACI designation is granted to individuals who have completed the AACI program of studies and fulfilled all the professional requirements of the Appraisal Institute of Canada. AACI members are qualified to offer valuation and consulting services and expertise for all types of real property. 

Candidate members of the Appraisal Institute of Canada (AIC) represent the future of the appraisal profession, individuals who are pursuing the rigorous AIC Program of Professional Studies and preparing to complete the final requirements for one of the Appraisal Institute of Canada’s prestigious professional designations. Admission to candidacy is open only to those who either hold a degree, or have 10 or fewer remaining requirements for the AACI, P. App designation (degree and AIC curriculum). Candidate members typically work actively in the profession as appraisers-in-training, within the limits defined by the Canadian Uniform Standards of Professional Appraisal Practice (CUSPAP), policies and regulations. Candidates participate in AIC’s Professional Liability Insurance program and can take on increasingly complex assignments as they gain expertise and knowledge, under the direction and mentorship of designated members.

As full members of AIC, Candidates are accorded certain privileges including the right to prepare and take limited responsibility for appraisal reports under the supervision of a designated member. As non-designated members, all assignments they undertake, and how they identify themselves, must be in strict compliance with the Canadian Uniform Standards of Professional Appraisal Practice and the Institute’s Code of Ethics.

Designated Members must adhere to AIC’s Canadian Uniform Standards of Professional Appraisal Practice (CUSPAP) and undertake on-going professional development. In return, they enjoy the full support of the Institute and access to services, resources and intelligence that enables them to practice their profession with confidence.

(source: Appraisal institute of Canada - https://www.aicanada.ca/about-aic/appraisal-institute-canada/)

During a visit to the property that is the subject of the appraisal, the Appraiser makes a visual assessment of the interior and exterior of the Subject Property. In a multi-tenant situation this may include the interiors of individual units/suites, the common areas and the mechanical facilities. This often involves photograpy of the improvements and on-site measurement.

Due to confidentiality, copies of appraisals completed by Phung Horwood are only available to the Client or Clients for whom the appraiser performs a service, unless specific authorization is given otherwise. This may or may not be the person who actually pays for the appraisal. In cases where the Lender or Broker orders the appraisal from the appraiser they are the Client, regardless of whether the owner pays the fee. 

Our appraisal/report fees are determined on a case by case basis. Determining factors (Not all inclusive) include: the scope of the assignment, the availability of relevant data, the size of the project, concurrent commitments/assignments and the required time frame for completion.

Depreciation Reports

A Depreciation Report (Reserve Fund Study) is first and foremost a financial planning process that is intended to analyze, assess and plan the funding for Contingency Reserves. The purpose of this analysis is to identify the funding needs within the Contingency Reserve Fund, in order to make recommendations to ensure that sufficient funding is available for future repairs and replacement of the common building elements or assets of a Strata Corporation.

The Depreciation Report is a complex document, and as such, we require additional information from the Strata Corporation when compared to insurance appraisals. As the report is financial based, we generally require several years of financial statements, the current and/or historical operating budgets and any available expense records. In the course of completing a Depreciation Report, the more information we have, the better informed we become. Any available building plans, maintenance histories and strata minutes are very useful. Additionally, discussions with longtime Strata members can provide useful information regarding the history of the development.

The site visit(s) will involve a more in-depth visual assessment of all common assets and elements of the subject building and property, numerous photographs and more detailed measurements. If there are any areas of particular interest or concern (i.e. recent or planned repairs/replacements) we will discuss them with Strata representatives. Generally we will require access to a sample of units for the purpose of making a visual inspection of balconies, decks and windows.

Every Phung Horwood Depreciation Report contains recommendations regarding the current and future contributions to the Contingency Reserve Fund (CRF). Through discussion with the Strata Council (and Property Manager if applicable) we make every effort to come up with a plan that is suited uniquely to your Strata. In some cases this can include a recommendation for increased contributions to the CRF. It is important to understand that your overall Strata Fees are dependent on several factors, only one of which is the CRF contribution. Each Strata Council will create their budgets based upon all factors and set Strata Fees accordingly. We do not make recommendations regarding your overall Strata Fees.

The purpose of the Depreciation Report is to ensure that the Contingency Reserve Fund is sufficiently funded such that future replacement of common assets and improvements can be readily achieved as needed. Therefore, over the course of a component’s lifespan, funds should be continuously accumulated towards its eventual replacement. The Depreciation Report will recommend that the component be budgeted for replacement at a certain time; however this is subject to change based upon future maintenance and repair practices. Eventually, the component will require replacement, and as long as contributions have been made in the past, the costs should be covered. If no contributions have been made, the replacement will need to be funded by special levy. Also keep in mind that unexpected events do occur no matter how well you have maintained your asset. By planning for a substantially or fully funded reserve, any unexpected expense should be at least partially covered.

Phung Horwood cost estimates are derived from the following:

Quotes from construction professionals involved with the Subject improvements;
Conversations with numerous local experts and sub-contractors;
Historical costing information contained within our office files; and
Industry recognized costing manuals and services.

We make a concerted effort to ensure that our data is reliable and accurate; however there are always certain variables involved. Any replacement or repair costs are subject to change over time and should be reviewed periodically to ensure that they remain relevant.

An effective Depreciation Report (Reserve Fund Study) should:

Identify and analyze all common reserve components, providing:
  A full description;
  The expected life-span;
  The current observed physical condition;
  The current effective age, in terms of physical deterioration and functional obsolescence;
  Any details of repair histories and expenditures; and
  An estimate of the remaining years of useful life

Provide a financial analysis on a component by component basis, including:
  The estimated current replacement cost;
  A projection of the future replacement cost at applicable long term inflation rates; and
  A projection of the future reserve requirements compounded and based upon long term interest rates

Provide a recommended funding model, which if adhered to, will result in sufficient funds to cover all future reserve fund expenditures.

In B.C. two alternative funding models must also be included.

In compliance with the British Columbia Strata Property Act, any Strata corporation with 5 or more units must have a Depreciation Report completed. A Strata corporation may waive the requirement for a depreciation report by a 75% (¾ ) vote, which is valid for a period of 18 months.

A Depreciation Report must be obtained every 3 years.

Absolutely. Phung Horwood makes a point of fostering and maintaining strong client relationships. If you have any questions or concerns regarding your report we are available via phone, email or in person to discuss them with you. In the case of a Depreciation Report, all Strata members will have the opportunity to provide some input as part of the process.

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