AIC330 - Foundations of Real Estate Appraisal

Outline info
Last revision date 2018-11-20 14:58:46.385
Last review date 2018-11-20 14:58:46.388

Subject Title
Foundations of Real Estate Appraisal

Subject Description
This subject begins with an introduction to the appraisal profession in Canada and summarizes the appraisal process. The three classic approaches to value are presented and analyzed as they may be applied to single-family and small, multi-family residential properties.

Credit Status
This is a credit subject applicable towards the Appraisal Institute of Canada's CRA and AACI designations, as well as UBC's Diploma in Urban Land Economics. Successful completion of the AIC course components of the program also earn students 50-60 degree credits toward the Bachelor of Business in Real Estate Program (BBRE) offered by the University of British Columbia (UBC) and Thompson Rivers University (TRU).

Learning Outcomes
Upon successful completion of this subject the student will be able to:

1. Explain why real property appraisal is necessary and the purpose and use of appraisals.

2. Demonstrate an understanding of the various definitions of value and the forces that create and affect value.

3. Describe the nature of real property and its components.

4. Identify the logical and orderly steps required in the appraisal process which lead to a conclusion of market value.

5. Explain the importance of neighbourhood, site, and improvement attributes with respect to determining value and to the appraisal process.

6. Explain the importance of a highest and best use analysis in an appraisal.

7. Identify the different methods available for land valuation and when each is appropriate.

8. Explain the underlying theory for the three approaches to value: direct comparison, cost, and income.

9. Explain and discuss the strengths and weaknesses of the three approaches and when each is most appropriate for application.

10. Apply the techniques of the direct comparison and cost approaches to value in a practical situation.

11. Explain the reconciliation process and complete a reconciliation to indicate an opinion of final value, or value range.

12. Demonstrate how to report appraisal findings in an appropriate report format.

Academic Integrity
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Please visit the Academic Integrity website to understand and learn more about how to prepare and submit work so that it supports academic integrity, and to avoid academic misconduct.

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Accommodation for Students with Disabilities
The College will provide reasonable accommodation to students with disabilities in order to promote academic success. If you require accommodation, contact the Counselling and Accessibility Services Office at ext. 22900 to initiate the process for documenting, assessing and implementing your individual accommodation needs.



  • Micro Foundations of Real Estate Economics AIC100 (BUSI100)
  • Capital Markets and Real Estate AIC101 (BUSI101)
  • Canadian Real Property Law and Real Estate Ethics AIC112 (BUSI112)
  • Foundations of Real Estate Mathematics AIC121 (BUSI 121). Note AIC121 is not required for AIC's CRA designations.

Topic Outline
Chapter 1  Real Property and its Appraisal

  • Concepts of Land
    • Governmental and Legal
    • Economic
    • Social
    • Geographic & Environmental
  • Real Estate, Real Property and Personal Property
  • Appraisal Practice
  • Appraisal Assignments and Reporting Formats
  • Purpose and Intended Use of an Appraisal
  • Appraiser Liability

Chapter 2  The Nature of Value
  • Distinctions Among Price, Cost and Value
  • Market Value and Other Types of Value
    • Market Value
    • Use Value
    • Investment Value
    • Going-Concern Value
    • Assessed Value
  • Factors of Value
    • Utility
    • Scarcity
    • Desire

Chapter 3  Foundations of Appraisal
  • Agents of Production
  • Anticipation and Change
  • Supply and Demand, Substitution, Balance and Externalities
  • Forces that Influence Real Property Values
    • Social, Economic, Governmental, Environmental

Chapter 4  Real Estate Markets
  • Defining Geographical Boundaries
  • Change and Transition
  • Analyzing Value Influences
    • Social, Economic, Governmental, Environmental
  • Characteristics of Real Estate Districts
    • Single Family, Multi-Residential, Commercial, Office, Retail, CBD, Industrial, Agricultural, Specialty, Forestry, Medical, R & D, High Tech, Educational, Historic

Chapter 6  Real Property Ownership and Interests
  • Real Property Ownership
    • Public and Private
    • The Bundle of Rights
    • Public/Private Restrictions on Ownership
  • Concurrent Ownership of Real Property
    • Legal Entity Ownership
      • Land Trusts, Partnerships, Stock Corporations, Limited Liability,
    • Syndications
    • Special Forms of Ownership
      • Condominiums, Co-ops, Timesharing
  • Types of Property Interests
    • Economic
    • Legally
    • Physically
    • Financially

Chapter 7  The Valuation Process
  • Definition of the Appraisal Problem
    • Client, Intended Users, Intended Use, Purpose, Date of the Opinion of Value, Property Characteristics
  • Scope of the Work
  • Data Collection and Property Description
  • Data Analysis
    • Market, Highest and Best Use
  • land Value Opinion
  • Application to the Approaches to Value
  • Final Reconciliation of Value Indications
  • Report of Defined Value


Chapter 8  Data Collection
  • Types of Data
  • Data Collection
  • Data Organization

Chapter 9  Market and Marketability Analysis
  • Fundamental Concepts
  • Levels of Market Analysis
  • Types of Analysis
  • Six-Step Process
  • Single Family, Apartment, Retail, Office, Hotel, Industrial, Agricultural

Chapter 10  Land or Site Analysis
  • Legal Description
    • Metes & Bounds
    • Rectangular Survey
    • Lot & Block
  • Title & Record
    • Ownership
    • Zoning / Land Use
    • Assessment / Tax
  • Physical Characteristics of Land
    • Special Characteristics of Rural, Agricultural or Resource Land

Chapter 11  Improvement Analysis
  • Property Inspection
  • Building Description
  • Analysis of Architectural Style and Functional Utility
  • Quality and Condition Survey

Chapter 12  Highest and Best Use Analysis
  • Fundamentals of Highest and Best Use
  • Testing Criteria
  • Highest and Best Use of Land as Though Vacant
  • Highest and Best Use of Land as Improved
  • Reporting Highest and Best use conclusions
  • Special Situations

Chapter 13  The Direct Comparison Approach
  • Relationship to Appraisal Principles
  • Applicability and Limitations
  • Procedure
    • Researching, Verifying, Selecting, Analyzing and Adjusting, Reconciling

Chapter 14  Comparative Analysis
  • Elements of Comparison
  • Quantitative Adjustments
  • Types of Adjustments
  • Sequence of Adjustments
  • Market Data Grids
  • Qualitative Analysis
  • Reconciliation

Chapter 15  Applications of the Direct Comparison  Approach
  • Quantitative Adjustment Techniques
  • Qualitative Analysis Techniques
  • Comparative Analysis

Chapter 16  Land and Site Valuation
  • Relation to Appraisal Principles
  • Applicability and Limitations
  • Alternative Techniques

Chapter 17 The Cost Approach
  • Relation to Appraisal Principles
  • Applicability and Limitations
  • Procedure
    • Depreciation

Chapter 18  Building Cost Estimates
  • Cost Data Sources
  • Cost Estimating Methods

Chapter 19  Depreciation Estimates
  • Age and Life Relationships
  • Market Extraction Method
  • Age-life Method
  • Breakdown Method

Chapter 20  The Income Approach
  • Relationship to Appraisal Principles
  • Applicability and Limitations
  • Definitions
  • Procedure

Chapter 21  Income and Expense Analysis
  • Estimating and Adjusting Rent
  • Income and Expense Data
  • Developing Reconstructed Operating Statements

Chapter 22  Direct Capitalization
  • Derivation of Overall Capitalization Rates
  • Residual Techniques
  • Gross Income Multipliers

Chapter 25  Reconciling Value Indicators
  • Re-Evaluation
  • Reconciliation Criteria
  • Final Opinion of Value

Chapter 26  The Appraisal Report
  • Standards for Written Reports
  • Types of Reports
  • Narrative Appraisal Report Format

Mode of Instruction
Students learn through classroom lectures and hands-on assignments during classroom hours.
There are homework assignments.  Students must have ready access to a computer with Word
for Windows in order to complete homework assignments.  Students have access to computers
through the Microcomputer Centre or micro labs where applicable.

Prescribed Texts
The Appraisal of Real Estate (3rd Canadian Edition), The University of British Columbia.

Course Workbook:  Foundations of Real Estate Appraisal. Latest Edition, The University of
British Columbia.

Note:  Photocopied texts are not permitted.

You may order textbooks directly from UBC, please use the following link and click on the tab "Diploma, AIC Books"

Reference Material

Required Supplies
Notebook or three-ring binder, paper, pens, highlighter, above noted text, calculator.

All students must have access to a personal computer when taking any Appraisal Institute course. You will find that a computer is a necessary tool in preparing and submitting your assignments, viewing your assignment answer guides, and for creating effective study notes to help you prepare for your examination. Students should also ensure that they have a high-quality printer (e.g., an inkjet or a laser) which will provide clear printouts of information from the Real Estate Division website.

All students must arrange for some form of Internet access. All of the Appraisal Institute’s courses offer numerous online course resources. Students should ensure they have Internet access prior to beginning their course work.

Promotion Policy

Grading Policy
A+ 90%  to  100%
A 80%  to  89%
B+ 75%  to  79%
B 70%  to  74%
C+ 65%  to  69%
C 60%  to  64%
D+ 55%  to  59%
D 50%  to  54%
F 0%    to  49% (Not a Pass)
EXC Excellent
SAT Satisfactory
UNSAT Unsatisfactory

For further information, see a copy of the Academic Policy, available online ( or at Seneca's Registrar's Offices.

Modes of Evaluation
Since this is a professional credit course, marking standards reinforce professional practice by
demanding legible, neat documents. Material should be grammatically correct as a result of
accurate proof-reading, proper spelling and punctuation. Late assignments are penalized at the
discretion of the instructor.

Students must pass the final examination to pass the course.

Absenteeism and Tests

  • Students should be aware that absenteeism will impact on their ability to achieve satisfactory grades.
  • If you are absent for a test or examination due to an emergency (death in the family, motor vehicle accident – not usually a business trip) official documentation must be provided to the Faculty of Continuing Education and Training Program Coordinator’s office, fax number 416-756-4360, prior to the test or examination and no later than the following day.
  • Assignments, tests or examinations missed without official documentation and approval, see previous bullet, result in a grade of zero.
  • A minimum grade of 50% on the final examination and 50% overall in the course is required to obtain a Seneca credit.           
  • Requirements for the UBC Certificate in Real Property Assessment require a minimum grade of 50% on the final examination and a minimum overall grade of 60% in the course.  
  • Requirements for credits with the Institute of Municipal Assessors and the Appraisal Institute of Canada require a minimum grade of 50% on the final examination and a minimum overall grade of 60% in the course.
Grading is based on the following marking scheme:
Assignments 15%
Project 1 10%
Project 2 25%
Final Exam  50%
 Project 1: Appraisal research exercises: 10% of final grade.

    This project requires the student to apply some of the course concepts towards several
    short practical case study scenarios while explaining various appraisal issues. They are
    then required to do field work. First, they must carry out a property inspection, involving
    a physical site analysis on a property selected by the student. Second, they are required to
    complete a research project focusing on an aspect of real estate appraisal chosen by the
    students, either on the Internet or based on published sources.

Project 2: Single-family residential appraisal: 25% of final grade.

    This project requires students to carry out an appraisal of a residential property. This
    requires that students have physical access to a building for inspection as well as information
    on its ownership and financial attributes. Students must carry out field work including a
    neighbourhood analysis, data gathering, finding and reviewing comparable properties, interviews
    with market participants, etc.

Please keep this document for future reference.  It will be required if you apply to another educational institution and seek advanced standing.

Academic Program Manager:
Jean-Pierre Patry

Approved by: Jean-pierre Patry