Ubc real estate assignment answers

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PROJECTS

©Copyright 2018 by the UBC Real Estate Division

SAGAR GARIKIPATI
©Copyright 2018 by the UBC Real Estate Division

Projects.1

PROJECTS In this course, you will be required to prepare and submit two written project assignments that are intended to synthesize your understanding of the course content. You will be presented with challenging, stimulating, and thought-provoking work that requires you to go beyond the course manual in applying this content in a practical context. These projects are also worth a significant portion of your final course grade.

Aspects of the projects are field assignments designed to give you practical experience in the tasks performed by real estate appraisers. You will, in effect, do what appraisers do in valuing real property.

Expectations for Your Reports In general, your reports are expected to provide the level of detail that the intended reader would require in a practical context. This means that you need to report in a clear manner any informa- tion that will be helpful to the reader in making their decision, for example, deciding whether or not to provide a loan or purchase a property. Therefore, your report must cover all pertinent information, be well-organized, and be professionally presented.

Please keep in mind that the intent of these projects is to simulate the type of report that you would actually deliver to someone in a real-world context. You should assume that your report will be read by someone who has knowledge in general business matters, but has no specific knowledge of real estate practice. You must write your report specifically to address the infor- mation needs of this person so that he or she can understand and apply your work. It is your job to focus the reader and provide him/her with the relevant information needed to make an informed decision, ensuring that the report is neither excessively long, nor too short. As such, brevity would be considered a positive point by the reviewer of your report. You will need to exercise some judgment as to what is and is not relevant and what should be included or omitted. If you are in doubt, you may wish to contact the course tutor or your fellow students on the course discussion forum in order to discuss what they are doing and get their advice.

Finally, students are also reminded that, in addition to a practical demonstration of appraisal and consulting processes, this is also an examination of the underlying theory. You must ensure that you provide sufficient explanations of the processes and procedures in order to demonstrate your knowledge of the material.

Report Specifications Below are some specific guidelines for preparing and submitting your projects:

• font must be of 11 point or larger, 12 point preferred; • preferred line spacing is 1.5 (not required on forms on Project 2); • preferred margins are 1 inch margins, maximum 1.5 inches (not required on forms on

Project 2); • pages must be numbered consecutively in the top right corner or bottom of page, separately

numbered for the report body and appendix; and • all sources of information relied upon in producing your submission should be carefully

documented in a bibliography or list of references (references used should be acknowledged). The suggested pages for each project are specified below. An appendix should provide necessary supporting documentation. Note that these are only rough limits; you should provide all pertinent information, i.e., anything that you used to substantiate your decisions. Note also that a well-written and organized report could require fewer pages.

Project 1 Project 2

Report Appendix Report Appendix

Suggested 10-15 pages 10-15 pages 25-30 pages 15-20 pages

Maximum 25 pages 25 pages 40 pages 30 pages

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Projects.2 Foundations of Real Estate Appraisal

Under no circumstances should you need more than the stated maximum number of pages for your report. If your submission exceeds these limits, EITHER: 1) you will be requested to resubmit within the page length requirements before the project is graded; OR 2) the additional pages will not be read by the marker and marks will be deducted for their inclusion.

Submitting Your Projects The project due dates can be found on the BUSI 330 Course Resources website under Important Dates and Deadlines. Projects must be submitted electronically using Turnitin, a web service that checks for content originality. Turnitin accepts Microsoft Word and PDF formats. Any supplemental files that cannot be inserted into your word processed file must be emailed to your tutor. You can find your assigned course tutor’s email address on the “Tutorial Assistance” webpage. Please include your course name, last name, and student number in the subject line of your email. You can find additional information for project submission under Submit Projects on your Course Resources website.

Project Grading and Return Your tutor will make a concerted effort to return your marked project in a timely fashion. The target turnaround time for marking is one week from the date of receipt. However, please keep in mind that the Real Estate Division’s tutors are generally full-time professionals who do tutoring on a part-time basis, and sometimes business pressures make it difficult to attain this target date (e.g., up to one additional week may be required). The tutors have been instructed to give priority to students who are working on time according to the course schedule. This means that if your project is submitted on time, it will receive top priority. If your project is submitted late, then your project will be marked after those on time are graded and other duties, such as tutoring, are taken care of.

This is particularly important towards the end of the course, when projects and exam preparation require a lot of the tutor’s time. You are best advised to keep to the course schedule and to submit your work on time. All projects submitted on time should be returned before the final exam. Those submitted late may not be returned before the date of the exam.

If you wish to view your project grades on the Assignment History webpage or the project answer guides, Project 1 is listed as “Assignment 12” and Project 2 is listed as “Assignment 13”.

Tips from the Tutor: The Details … Communicating Your Results Effectively

The projects simulate the type of report that you would actually deliver to someone who is paying you to prepare it. You should assume that your report will be read by someone who has some general real estate knowledge, but who does not have your familiarity with real estate valuation. You must write your report specifically to address the information needs of your client.

But also keep in mind that, in addition to a practical demonstration of an appraisal analysis, the projects are also an examination of the underlying theory. You must ensure that you provide sufficient explanation of the process and procedures in order to demonstrate your mastery of the learning objectives.

Ensure that your project is logically organized and presented professionally. There will be marks allocated for presentation. Reports may be failed if spelling or grammatical errors are excessive, or if they are extremely poor in composition. The report must flow logically, whereby the reader is led to the conclusions reached by the student. A demonstration of professional report-writing skills within the context of a structured format is expected.

Also ensure you do not overwhelm your reader with excessive details. The supporting documentation and photographs in the appendices should be limited to that which helps you to build your case regarding the property; i.e., you should not include every single piece of information you find on the property, you have to exercise judgment on what you believe is relevant to the reader of the report. A very well-written and organized report could require significantly less than the maximum number of pages and this brevity would be considered a positive point by the reviewer of your report. If you are in doubt, you may wish to contact the course tutor or your fellow students on the course discussion forum to discuss what they are doing and get their advice.

©Copyright 2018 by the UBC Real Estate Division

Projects.3

Individual Work Requirements The projects count for significant credit towards completion of this course, which is an educational requirement in a degree credit program and for accreditation by professional real estate associations. Because of these important consequences, it is vital that students produce and submit work that is entirely their own. Completing the projects in a group is NOT allowed – answers must be produced on an individual basis. The marker of this project must be able to certify that each individual student has a reasonable understanding of the concepts and techniques taught in this course.

Any recognized academic misconduct, including copying other students’ work or plagiarism from any source, will result in academic consequences as specified in the “Program Regulations” section of the Real Estate Division Student Handbook.

©Copyright 2018 by the UBC Real Estate Division

Projects.4 Foundations of Real Estate Appraisal

PROJECT 1: Appraisal Research Exercises

This first of two projects will provide you with practical applications of the appraisal concepts presented in the first four lessons in this course. You will answer some specific questions on the theories underlying real property appraisal and then complete a field project. This project is designed to delve deeply into the theories and concepts you have learned so far in this course, providing you with an in-depth look at how these theories and concepts apply to appraisal.

Total Marks for Project 1: 100 10% of course grade

Project 1 continues on the following page

Learning Objectives After completing this project, the student should be able to:

1. Make connections between the appraisal theory covered so far in this course, seeing how the components blend together in practice

2. Discuss the nature of value and its various categories and definitions 3. Explain the forces that affect the determination of value(s) and how these forces interact 4. Describe the nature of real property and its various components, such as ownership rights,

property rights, and types of ownership 5. Recognize the basic social and economic principles that affect the market value of property and

how these various principles must be analyzed and applied in the appraisal of a subject property 6. Explain the principle of highest and best use and demonstrate how it is applied in appraising

residential properties

Project Grading Your grade on this project will be based upon:

1. Part A: Selected questions on Lessons 1-4 (50%) 2. Part B: Field project (50%)

PART A – Questions on Lessons 1-4 (50 marks) The following questions should be answered in paragraph format. It is expected that students will provide a suitable discussion, and therefore short answers and point-form are not acceptable.

1. Discuss two examples from your own personal experience when you found yourself assigning or justifying a “value” for something. What category or definition of value were you applying? What factors influenced your final decision to buy and pay the price you did for the item? (6 marks)

2. Consider the following list of possible land use controls: • zoning • planning • municipal/community plan • building standards • development controls • subdivision controls • rent controls • land preservation legislation • environmental legislation

Research ONE of the above controls that is prevalent in your community (or another land use control not listed above if it is relevant in your community). Provide a brief report (1-2 paragraphs) on how this affects the market value of land in your area. (4 marks)

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Projects.5

PROJECT 1, continued

Project 1 continues on the following page

3. A client has hired you to appraise his home for refinancing purposes. He has asked you to conclude a value that is approximately 10% higher than its market value.

Write a letter to respond to the client’s request, making reference to the ethical standards of an appraisal organization of your choosing. Your letter should be in business format and should include the name of your professional association, the title of the standards, and their guidelines to follow when completing a valuation assignment.

The Online Readings webpage provides links to various appraisal standards. A recommended reference is the Canadian Uniform Standards of Professional Appraisal Practice (CUSPAP). (6 marks)

4. Externalities can have a significant positive or negative effect on a property’s value. Find an example of an externality in your neighbourhood and discuss how it affects (or affected) the adjacent land(s) value, either positively or negatively, and can it be corrected or adjusted to reduce the impact on property values? (4 marks)

5. The Appraisal Institute of Canada’s First Principles of Value break down the valuation process into fundamental considerations that are universally applicable to any value-related situation:

a. Problem Identification b. Purpose and Intended Use c. Property Content d. Property Rights e. Land Use Regulations f. Legal Considerations: Legislation and Litigation g. Highest and Best Use h. Economic Variables i. Research

Outline a situation from your work or personal experience where property value was a consideration and briefly explain the relevance of any five of the First Principles in this situation. The situation you focus on could be related to real estate practice (e.g., appraisal, assessment, consulting, etc.) or it could simply be establishing a price in your own real estate purchase or sale. (5 marks)

6. The following questions refer to the Nygard et al v. District of Surrey case included at the end of Lesson 4. Also included with this case was a summary and site plan.

a. How does the principle of contribution relate to the existing improvements? (2 marks)

b. Explain how the following factors affect the highest and best use of the site in this case. Use the facts in the case to support your answers: (7 marks)

i. present use ii. future use iii. legal use iv. physically possible v. financially feasible vi. demand vii. maximally productive use

c. In this case, what factors did each of the appraisers examine when considering the probability of a change in zoning? (4 marks)

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Projects.6 Foundations of Real Estate Appraisal

PROJECT 1, continued

Project 1 continues on the following page

d. The claimant’s and respondent’s appraisers were both accredited appraisers with considerable experience. Why did the Board disagree with both appraisers? Discuss the rationale of the board in determining market value. In your answer, ensure you state and discuss the final market value as estimated by: (6 marks)

i. the Claimant Appraiser ii. the Respondent Appraiser iii. the Compensation Board

e. Discuss three legal or appraisal principles flowing from this case and briefly explain the relevance of each to appraisal practice. In other words, outline lessons learned that may be useful for real estate appraisers in resolving future disputes over other properties? (6 marks)

PART B – Field Project (50 marks) You are required to complete a physical inspection of a residential property and inventory its characteristics. The purpose of this assignment is to acquaint you with the methodology used in residential property inspection by having you actually carry out your own analysis. Note that aspects of this analysis may be useful in completing Project 2.

You may choose any residential property for this assignment. Condominiums are acceptable, although a single-family house is recommended. Physical access will be an important consideration in your choice of property – to carry out this assignment effectively, you will need to inspect all parts of the building/ property, including some that may not be publicly accessible, such as mechanical rooms and the roof in a condominium building. It is recommended that students choose their own place of residence or another property they are familiar with as the subject property for this project. This will allow the greatest freedom of access for inspection and may also mean that some of the research requirements are taken care of, e.g., site sketch, photos of house, etc.

You are to report your inspection results using the first two pages of the Appraisal Institute of Canada’s “Full” Residential Appraisal Report form. A fillable PDF version of this form is found on the Online Readings webpage. Note that some of the characteristics on the forms will not be answerable for all properties.

In addition to this form, you are required to complete on separate pages the following specific questions and items. For (b), (c), and (e), the separate report can be completed in lieu of the Comments section of the report (i.e., your report replaces the Comments sections).

a. Photographs of Subject:

i. Provide one front that shows depth of the property, one rear, and one street scene with other dwellings.

ii. Your appendix should contain additional photographs, if necessary, to assist the reader in understanding the report – such as the site, the surrounding area/neighbourhood, and in particular any defects noted (within reason). The photographs and all other supporting

Property Selection / BUSI 398 Property Registration

Students who plan to continue on to the BUSI 398 Residential Guided Case Study course may want to consider using the same property for this BUSI 330 project and for BUSI 398. If so, you may wish to confirm now that you are choosing a property that is suitable for BUSI 398. The Online Readings webpage provides a checklist from BUSI 398, which outlines mandatory and recommended conditions for property approval. For example: condominiums are NOT acceptable in BUSI 398.

You may also pre-register your subject for BUSI 398 by submitting the ASubject Property Form@ from the BUSI 330 website. The subject property must be approved by a BUSI 398 course tutor before it is officially accepted; pre-registration here DOES NOT guarantee this approval, it simply holds the property for your use later (for up to five years).

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Projects.7

PROJECT 1, continued

Project 1 continues on the following page

documentation in the appendix must be clearly labelled and referenced within the report in the relevant sections. Note that a table of contents may be helpful for you in organizing your work and for the tutor in grading it.

b. Neighbourhood Analysis: the form requires you to identify a number of neighbourhood features. The Comments section requires analysis of these neighbourhood features as to how they ultimately affect housing prices in that location. You do not need to fill out the Comments section of the form; instead, discuss the Comments section’s requirements in your associated report:

i. provide the neighbourhood name and a two-three paragraph description of the major characteristics that define the neighbourhood, such as its historical significance, the socioeconomic mix of residents, employment and amenities, and the form of boundaries that distinguishes it from other neighbourhoods.

ii. discuss the neighbourhood’s growth and life cycle, the value influences within it (i.e., economic, governmental, environmental, and social issues, both positive and negative), value trends, and market appeal.

iii. provide a city map showing the neighbourhood boundaries and the subject’s location. c. Site Analysis: similar to above, you do not need to complete the Comments section; instead,

discuss this section’s requirements in your associated report:

i. discuss in two-three paragraphs how the positive and negative features of the property ultimately impact its value: e.g., its orientation, appropriateness for surrounding uses, environmental issues, etc.

ii. provide a plot/site plan showing the dimensions of the lot, the siting of the building and all setbacks and any easements. (If you have instead been provided with pre-produced site plans, you must evaluate them in detail and comment on their accuracy).

iii. note any improvements on the site such as hedges, rock walls, garage, or driveway, and adjoining streets and lanes.

d. Land Use Controls and Zoning: in addition to the requirements on the form:

i. detail the subject property’s zoning designation: stated uses, maxima and minima defined by the zoning. Present a comparison table that summarizes the zoning criteria and subject’s data.

ii. explain the reasoning for your conclusion on the form as to whether or not the subject property conforms to the land use controls.

iii. comment on how strictly the zoning requirements are enforced and your opinion on the likelihood of any zoning changes in the foreseeable future (e.g., review Official Community Plan, recent redevelopment permits in the area, granting of variances, etc).

iv. discuss any other related legal issues that may affect the subject’s site, such as title restrictions, oil tanks, environmental or heritage laws, etc.).

e. Improvements Description: in addition to the requirements on the form:

i. provide a floor plan or rough sketch of the building that shows the exterior dimensions of the improvements; locations of windows, doors, and other openings; and any other prominent features of the improvements (if you have instead been provided with pre-produced floor plans, you must evaluate them in detail and comment on their accuracy).

ii. note the measurements for various walls and calculate the areas for the various component parts: e.g., gross floor area; ground floor area; garage; patio; basement; finished basement, etc. Ensure the floor areas are based on the external measurements of the home.

iii. similar to above, you do not need to complete the Comments section; instead, discuss this section’s requirements in your associated report. In 2-3 paragraphs, analyze the value impact of the improvement features.

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Projects.8 Foundations of Real Estate Appraisal

End of Project 1

PROJECT 1, continued

f. Assessment and Property Tax: the assessment and property taxation information is summarized in the Subject section of the form; in addition to this requirement:

i. identify the assessment authority and explain how the assessed value is derived. State the effective date of the assessed value.

ii. briefly discuss your opinion of the accuracy and equity (consistency, fairness) of the subject’s assessment. Comment on the likelihood of a change in assessed value in the foreseeable future.

iii. explain how the tax rate is derived in the local municipality. Show the subject’s tax calculation, explaining all elements of the current tax amount. Comment on past trends in tax amounts and its expected future level.

Submitting Projects

Please note that the projects must be submitted directly to your course tutor by Turnitin.com, a web service that checks for content originality. See the “Submitting Written Assignments” link on your Course Resources webpage for details.

Note that Turnitin accepts only one submission per assignment/project so all relevant information must be in one Word or PDF file when submitting your project. Suggestions for including this project in a single file:

1. Complete the report in MS Word; for the 2-page form, copy a “screen capture” and paste it into the document. You can also insert or paste photographs into this document.

2. Complete the report in Adobe Professional (if you have access to this program): fill out the PDF form, complete the rest of report in Word and save it as a PDF, then combine the two PDF files.

If you have technical problems with incorporating the form report required in Part B, you may email this directly to your tutor.

©Copyright 2018 by the UBC Real Estate Division

Projects.9

PROJECT 2: Residential Property Appraisal

Project 2 requires you to analyze and appraise a residential property. The purpose of this assignment is to acquaint you with the methodology used in residential property appraisal by having you actually carry out your own analysis. You will be required to gather and analyze information from a variety of external sources. This could include interviews with appraisers, internet searches, visits to local government offices, and so on. The goal is to make this exercise as realistic as possible.

Total Marks for Project 2: 100 25% of course grade

Project 2 continues on the following page

Learning Objectives There are two major, implicit learning objectives for this project. After completing this project, you should be able to:

1. logically analyze an appraisal situation, determine what information needs to be gathered, and gather this information systematically and effectively; and

2. apply your research skills to better understand the market and to become very familiar with all aspects of a specific property and sub-market.

Client Expectations (Purpose and Intended Use)

Brendan and Lena Fanella have made an offer to purchase a residential property. As a part of their mortgage financing application, the Jordan River Credit Union has commissioned you to prepare an appraisal report. The client has requested that your appraisal report follow the format described below in “Report Specifications”. The effective date of this appraisal is today. You are to find the market value of this property for sale purposes, assuming there is clear title, with no mortgage or other encumbrances against the property, such as easements or restrictive covenants.