Our expertise in real estate evaluation enables us to help you make a decision relatively to the asking price of your property and it also allows us to corroborate the price in an offer to purchase.

We also accept mandates to appraise properties for legal purposes as well as consulting or if a market value is needed when a property is sold without an intermediary.

Our reports are conforming l'Ordre des Évaluateurs Agréés du Québec's requirements.

We are pleased to have this opportunity to explain the definition of each of the different techniques used when establishing the market value of a property.

Definition of the Appraisal Approaches to Value:
There are three (3) different approaches to estimate the market value of a property.

• The "Cost Approach" consists of the following steps:
1. Estimate the value of the site as if vacant;
2. Estimate the current replacement cost of the building;
3. Estimate and deduct all types of depreciation and obsolescence that may affect the said building;
4. Add the value of the land, the value of the building (depreciated) and the contributive value of the land improvements if pertinent.

The Cost Approach relies on the Principle of Substitution which states that a wise buyer will not pay more for a property than its cost of reproduction.

• The "Sales Comparison Approach" relies upon the analysis of the most recent sales involving comparable properties to the subject (involving properties which are comparable to the subject property) in order to adjustthe observed sale price with regard to the property to appraise. Basically, the market approach is based upon the substitution principle which states that a wise buyer will not pay more for a property offering the same characteristics. In order for the method to be accurate, there should be few dissimilarities between the comparable. In order for the method to be accurate, there should be few dissimilarities between the comparable properties. The application of sales price adjustments should be reliable, therefore based upon market observations.

• Finally, the "Income Approach" , which concerns properties generating revenues, consists into capitalizing the normalized annual net income of a property at a rate that comes from the market in order to estimate its market value. Such approach to value is based upon the Principle of Anticipation which states that an investor will pay a price based upon the net income and the expected yield of return he expects to obtain on the invested capital.

We hope that the above will be of some help to you. Please do not hesitate to contact us for any further information.

Robert-Charles Ferland
FERLANDIMMOBILIER

Tel.: 514.246.5653
Fax. 514.697.5200
rcf@videotron.ca