Real Estate Appraisal Systems: The Quebec (Canada) Experience

By November 20, 2014 Blog No Comments

by Ossama Kettani & Muhittin Oral

Real estate appraisal systems are of great importance to several socio-economic stakeholders for different reasons and justifications: local governments and municipalities for taxation purposes; banks for mortgage and other credit applications processing; property valuation companies for marketing activities; and property developers and investors for sound investment decision-making. The Province of Québec, Canada is no exception in this regard.

In a recent research paper, Kettani and Oral (2014) summarized the real estate appraisal system that has been developed for and with CUQ (Coomunaité urbaine de Québec), CUM (Communaité urbaine de Montréal), and Communaité urbaine de Gatineau (CUG) and implemented over the last twenty years in the Province of Québec. The development and implementation of the Québec Real Estate Appraisal System, as indicated in Table 1, have been realized in three main stages:

Stage 1: This stage entails an experimental study to illustrate how an appraisal method can be developed and used in the case of the City of Cap-Rouge, a suburb of Québec City, Canada, involving around 4,000 residential properties. The sponsor and the user of this experimental study was Communaité urbaine de Québec (CUQ) in mid 1990s. The primary objective of CUQ was to come with an appraisal method for the purpose of taxation by which the property value estimates can be justified as to their fairness and reliability in the eyes of property owners. Another objective was to support defending and justifying the estimates should the property owners decide to take CUQ to the courts of law to challenge the likely perceived unfairness of the CUQ appraisals.

Stage 2 was a response to the second major contextual change due to the inclusion of more municipalities of Québec City in the property appraisal system. This stage included all of the 12 municipalities under the administration of CUQ with a total of almost 165,000 real estate properties. This stage distinguished itself from the previous one not only in terms of the increased number of real estate properties covered (from 4,000 to 165,000 units) but also from the inclusion of more profile types of properties (such as farms, commercial places, and industrial units) that were dealt with in the appraisal process. The primary goal of the appraisal system develop for CUQ was again the very purpose of determiming the taxes to be charged to the real estate owners, this time in the Greater Québec City.

Table: Main Stages of The Québec Province Real Estate Appraisal System

Stages Modeling Characteristics Hardware & Software Requirements Number of Real Estate Properties
Stage 1: Experimental Study – Cap-Rouge Multi-Criteria Analysis Data Files. Excel–Based Decision Support System. 1 Municipality4,000 Units
Stage 2: Expanded Study – Greater Québec City 

 

Multi-Criteria Analysis though Comparables Data Base. Single Intranet Distributed System. 12 Municipalities165,000 Units
Stage 3: Extensive Study – Québec Province  Multi-Criteria Analysis through Comparables and Goal Programming Data Warehouse. Multi-Intranet Distributed Systems. 685,000 Units(Québec City – 165,000, Montreal – 450,000, Gatineau – 70,000,

Stage 3: The third contextual extension was the system that has been designed and developed for the Communaité urbaine de Montréal (CUM) – approximately 450,000 real estate properties; and for the Communaité urbaine de Gatineau (CUG) – around 70,000 units, totaling an inventory size of about 685,000 real estates, with those of CUQ.

In addition to these three cities in the Province of Québec, the real estate appraisal system is currently being used by two more organizations: One of them is Evimbec, an organization making valuations mostly for the municipalities in rural Québec, covering about 350,000 properties. The other is duProprio, a real estate marketing company having around 70,000 units in its inventory. When all the users are considered together, the appraisal system developed for CUQ, CUM, and CUG is the basis of valuation of 1,050,000 properties.

For the details of the Québec Real Estate Appraisal System, the readers are referred to Kettani and Oral (2014).