Course Description and Outline

CPD 102: Valuation of Property Impairments and Contamination

Pre-requisite: Recommend BUSI 331 or a thorough understanding of the theory and application of the three approaches to value.

These three lessons introduce the student to the theory and methods used in the valuation of properties with impairments or detrimental conditions, such as contamination. The first lesson offers a brief overview of environmental concerns as they pertain to real estate. The different types of contamination are described, in addition to the various levels of environmental audits. The second lesson focuses on the valuation of impaired properties in general, outlining valuation tools for analyzing real estate damages and the impaired condition. Bell’s Detrimental Condition Model is introduced. The third lesson builds on the inspection and appraisal information presented earlier and illustrates the specific valuation techniques for analyzing the effect of contamination on real estate value. Case studies illustrate practical examples of how to apply the contents of the appraisal toolbox when faced with valuing an impaired property.

Course Outline

FOREWORD: Introduction to Professional Development Courses

LESSON 1: Introduction to Property Impairment

  • Instructor's Comments
  • Identifying Contaminated Properties
  • The Nature of Contamination
  • Frequently Encountered Hazardous Substances
  • Transportation Mechanisms
  • Environmental Law in Canada
  • Determination of Liability
  • Environmental Site Assessment (ESA)
  • Environmental Reviews and Appraisers
  • Financial Considerations of Contamination
  • Summary
  • Review and Discussion Questions
  • APPENDIX 1.1: Environmental Contamination Glossary
  • APPENDIX 1.2: Detrimental Conditions (Impairments) and Typical Classifications
  • APPENDIX 1.3: Canadian Federal and Provincial Legislation, Departments and Programs
  • APPENDIX 1.4: AIC Claim Prevention Bulletin CP-02B-E

LESSON 2: Role of the Appraiser and Application of the DC Matrix

  • Instructor's Comments
  • Value Impacts of Environmental Contamination
  • The Detrimental Condition Matrix
  • The Detrimental Condition Model
  • The Bell Chart
  • Valuation Standards and Impaired Properties
  • Summary
  • Review and Discussion Questions
  • Appendix 2.1: Guide Note 10 to the Standards of Professional Appraisal Practice
  • Appendix 2.2: Airport Noise Study

LESSON 3: Methods and Techniques for Valuing Impaired Properties

  • Instructor's Comments
  • Evaluating Market Behaviour: Valuation Methods
  • Cost Approach
  • Direct Comparison Approach
  • Income Approach
  • Monte Carlo-Based Method
  • Market Surveys
  • Applications of the Impaired Valuation Technique
  • Property Impairment Case Studies
  • Contemporary Appraisal Practices and Issues
  • Summary
  • Review and Discussion Questions
  • Appendix 3.1: Property Details for Case Study 3

AFTERWORD

  • The Final Quiz

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