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Ten on the 10th: real-estate appraisal Q&A with My Phung of Phung Horwood
Ross Marshall of CBRE Victoria speaks with My Phung of Phung Horwood about real-estate appraisal in Victoria.
Ten on the 10th: real-estate appraisal Q&A with My Phung of Phung Horwood
Citified's Ten on the 10th is a monthly question-and-answer segment connecting our readers with the insight and knowledge of Victoria's top real-estate and business professionals.
February's Ten on the 10th features My Phung of Phung Horwood, a Victoria-based real-estate appraisal firm.
Asking the questions is Ross Marshall, Vice President of the Victoria offices of commercial real-estate brokerage CBRE. As a leader in facilitating large-scale commercial real-estate transactions throughout the Capital Region – which include apartment complexes, industrial retail and office properties, and land/development opportunities – Ross and his team are at the forefront of market-leading real-estate transactions on Vancouver Island.
Would you like to be featured as part of a future Ten on the 10th Q&A? We'd love to hear from you.
How did you become an Appraiser?
This is probably one of the most frequently asked questions for me.  Growing up one would typically hear about professions such as a lawyer, accountant, doctor or teacher.  You don’t often hear about someone saying “When I grow up I want to be a Real Estate Appraiser”. If you did hear about real estate, most naturally you would think of a profession as a realtor or mortgage broker perhaps?
I fell into this profession while I was finishing up my last year of Commerce at the University of Victoria in the spring of 2000. I had just moved back to Victoria from having spent the year working in Montreal and was working part time at a popular restaurant/lounge called Hugo’s.  Anyone currently between ages of about 40 and 70 in Victoria probably remember that spot fondly.  Anyways, a friend of the owners was an appraiser that was highly specialized in hotels, resorts and eventually he moved into casinos.  More specifically, he specialized in property assessment appeal work across Canada for these asset types.  
He was working on some large files at the time and needed an assistant for about a year. It was perfect timing as I was in the final term of my degree and had the cliché plans of traveling after I graduated. So it was a great way to make some money for my travels.  Flash forward from that fateful day and it was 10 years working with the same firm.  I went back to school through the UBC Sauder School of Business and received my AACI designation in 2006 and helped build the appraisal side of the business before I went on my own in 2010.
Why did you decide to go on your own?
I loved the first 10 years of my appraisal career. I owe a lot to that time and my mentor.  I was in my early 20’s when I started and was able to travel all over the country to amazing and not so amazing spots to look at different hotels, motels, resorts etc. It was a huge learning curve for me, especially for appraisal work as they are very difficult asset classes to value.  I worked in property assessment appeal work for a big part of that time and was involved in some fairly large cases.  I was contracted by both public and private sector with public being mainly with the City of Winnipeg. For a few years we helped them transition their hotel portfolio from Cost based valuations to Income based valuations.  I even worked back in Montreal where I had to try and figure out how to tap into my Grade 12 level French to negotiate with Quebec Assessors.  It was so challenging – and I definitely was thrown in head first.  So as they say, “you either sink or swim”. I was always raised to choose the latter.
So after a decade of traveling constantly and mostly working outside of my home town of Victoria I was feeling the need to plant some roots.  I was also pregnant with my son and just felt it was the right time to pivot.  I took a look at the local business landscape and saw that there was or was soon going to be a big void left in the Victoria appraisal community as many of the existing appraisers were nearing retirement age. Coupled with only a handful of successors I saw a big gap.

So after I conducted a bit more due diligence and confirmed there was a need, I felt I was in a good position to take advantage of the opportunity.
So having traveled all over the country for work – you could have settled in other cities, larger cities. Why Victoria?
I love Victoria. Period. I think the opportunity to see other parts of the country and also the world through my 20’s helped me to appreciate what Victoria was all about at a young age. I was happy to work in the bigger cities but I was even happier to come home to the Island. When I graduated from UVIC I would say 8 out of 10 of my fellow alumni left immediately as there wasn’t much of a career path for newly minted business students back then. I was approached by my friend and one of my mentors Jim Botten, who was the commercial appraiser for Mills Appraisal Group. Jim had heard I was looking to focus back in Victoria and told me he was planning to retire. He was looking for someone to take over the commercial files at Mills for him. So he introduced me to Amanda Mills and we have been colleagues ever since and still share an office to this day.
Our market along with the rest of the country had just come out of the real estate collapse of 2008/2009.  Everyone was cautious but starting to recover from those trough years. I was again in the right place at the right time and able to grow my business along with the unprecedented real estate boom that has occurred in the last 10 years. 
Victoria has been very good to me and my family. I was so supported and encouraged by the local business community when I decided to start my firm in Victoria. I gave myself 5 years from the time I took my first file to see if I could make a go of it in my hometown. Now, I couldn’t imagine working and raising my son in any other community. 
Tell us about Phung Horwood and a bit of the firm’s philosophy or company culture? What’s it like to work at Phung Horwood?
Well Phung Horwood is a combination of my last name and my colleague Richard Horwood’s last name.  Some may recognize the name Horwood from the accounting firm of Green Horwood that Richard’s dad, Cliff, was one of the original partners in.   Richard or Dick to those that know him, has been an appraiser in Victoria for the last 20 plus years.  We knew each other through some crossover work when I was with my previous hotel firm.  We actually were awarded our AACI designation at the same luncheon some 13 years ago.  
When I decided to work back in Victoria, Dick was really supportive and was always ready to help me navigate through the local landscape. After about 2 years or so I hired Jessica Boucher to come on board with me as my client base grew.  Then about a year after that Jessica and I knew we needed to figure out how to manage our growth.  Dick at the time also had a “right hand” person, Marcello Sequeira and was in the same position.  So we decided to merge names and resources and here we are.
It was an easy decision to merge as I would say that we both, actually all four of us have very similar philosophies. We believe that the success of our business is directly tied to our relationships not only with our clients but with each other.  We are a very relationship based industry in my opinion. I rely so much on my clients and colleagues across all related professional disciplines on an every day basis. I don’t think it’s possible to be a good appraiser without good and trusting relationships, especially in Victoria where there is maybe 2 degrees of separation. 
To expand on this, I think my biggest source of pride in Phung Horwood is our strong reputation in the business community. Our service and product is based on trust, expertise, duty of care and professionalism. I am always so touched and rewarded when I hear from people that they were referred to us or have just heard about our solid reputation.  I don’t take it lightly or for granted and work every day to maintain it to the best that I can. I think it’s instilled and permeates through our whole company and we always strive to provide a high level of quality in both our service and our product.
In terms of how is it to work at Phung Horwood? Well you will be well fed with lots of treats and the occasional Vietnamese meal  but in the reverse you will be peer pressured to join our weekly pilates/yoga and spin classes too. Jessica and I just did our first boxing class so unfortunately for our office staff they are living in fear of being asked to do that next.  In all seriousness though, it’s a very collaborative environment.  We have separate clients and work on individual files; however we definitely provide checks and balances along the way to make sure we are providing the quality and knowledge base that people expect of Phung Horwood.  Most importantly we all enjoy each other’s company at work and even outside of work. We all attended Jessica’s wedding last September and I can tell you no one was an “obligatory” invite.  We grew in numbers recently not because we had to but because the right people came along and they were a perfect fit for us.  

Each person plays multiple roles in our office, we work very hard and handle some pretty large and complex assignments. But there is always time for a lot of laughter and levity between it all.
Tell us why, in your opinion, is a getting a professional appraisal by a qualified appraiser so important? 

Anytime someone needs to make a decision that is value based on their real estate asset I think seeking the consultation of a professional appraiser should be on the top of the due diligence list.  As an appraiser my job is to constantly be researching and recording data that then gets analyzed and interpreted into industry norms, ranges, trends and of course the final destination is that of a  well supported opinion of value.  There can be a lot of conjecture in our industry especially in a market like Victoria.  Lots of speculation, rumours, hearsay etc. that can really have an impact and often times mislead people’s perception of value. It is probably one of the bigger challenges an appraiser faces on a regular basis – to get past all the noise and get down to the facts. I think it’s one of Phung Horwood’s most appreciated strengths from our Clients. 
I also think one of the biggest strengths of not just our firm but should be of any good appraiser is the ability to bridge the knowledge and communication gap between different professional disciplines. As an appraiser we can communicate in different “languages” to help facilitate a better understanding between say the lender and the investor. Another example is our ability to understand and interpret different bylaws and if necessary discuss them with municipal planning departments in order to relay the information back to the developer. 
What should someone look for in a proper appraisal – how can one tell it is a quality appraisal?
Other than of course suggesting you have it completed by Phung Horwood…..? Kidding aside I think as appraisers we have all heard the tongue and cheek comments such as “the Client only cares about the one page”.  In many cases that is true – but that makes for one really expensive page.  
A commercial appraisal can be on average between 40 and 60 pages depending on the scope of the assignment.  I would like to think that if our clients read through our reports front to back – or at least most of it, that they feel it was all relevant information.  I would hope they find each section beneficial and that the reasoning behind the valuation, which is the latter half of the report is supported by all the market and property data at the front of the report. The valuation section is of course the crux of our work and where people will focus their attention to.   So that valuation section should be well justified and supported with good data and reasoning. There should be consistency in the appraiser’s thought process and it should feel methodical.  Then finally the opinion of value should be not be a surprise ending but rather an expected conclusion when the reader finally gets to that page.  Simply the report should not read as a suspense thriller with twists and turns throughout the storyline nor should it read like a marketing brochure or promo piece for a project.  
I would like to think that even if my Client or the intended end user doesn’t agree with my opinion of value, they were able to follow my line of logic and understand how I came to the value. I think if both the Client and Appraiser have a good understanding of the document and the valuation process it allows for them to be more constructive when discussing any potential differences in opinion when it does arise.  Makes for a much better working relationship in the long run.
Can you maybe elaborate a bit on who typically uses your services?
It’s a really mixed bag of clients for sure. It can be the downsizer looking to see what the value of their single family home is before they sell. However, most of my work is commercial based, so I often deal more with investors, lenders, property management groups and brokers. I also work with public sector groups such as municipalities and non profit groups.  In terms of where my Clients are typically based in, again it can really range; however as I am focused in the Capital Region I would say more than 50% of my client base is here in Victoria.  2nd to that would be from the Lower Mainland, specifically Vancouver Proper. Our town has always had several long time developers and investors from the Lower Mainland. However in the past 5 years there has been some new groups coming in to the market or existing ones expanding their portfolio.  But I would say the bulk of my client base is still Vancouver Island and specifically Greater Victoria based.
You mentioned that figuring out norms and tracking trends in the marketplace is a big part of what you do.  I have to ask if there are any high level trends or comments on the market place that you can share with the readers? Maybe given the hot topic of development and specifically multifamily?
Well, it’s no secret that within the last few years new construction across all residential asset classes from single family, attached housing and multifamily were record breaking, year over year.  This was driven by a perfect storm of several factors but low lending rates for both the construction phase and take out mortgage phase would have been one of the biggest drivers.  Net migration was also positive throughout the Region with the Westshore consistently leading in population increase, which results of course in higher demand. So that is more of our recent past and in some markets still occurring but definitely at a relatively more cautious rate. When I say relative that is important as our benchmark pace of growth may be skewed as we come off recording breaking years.  We were in an imbalanced supply and demand scenario for years that was to the benefit of the seller.  So now as we normalize, I think it is even more important to seek consultation with your appraiser.  It goes back to my previous opinion that one of our biggest values to our Client is the ability to objectively look at market data, sift through the fodder and provide well supported and rational analysis and opinions.
In terms of a current “trend” or something I am spending a lot of time focusing on right now and likely for the foreseeable future is the multifamily asset class.  More specifically, I am looking at new purpose built rental supply that is being completed by both the private, public and non profit sectors.  I am not only interested in the amount of new supply coming into the market; but what type of new rental supply and where this new supply will be. We are a region with 13 municipalities; however geographically we are small. Every area will need some level of new supply that should be targeted at their traditional and evolving demographic groups.  So how do we, we as in all industry participants from private to public, ensure that we provide supply in the most effective manner? How can we collaborate to address the respective goals of each community for their demographic groups but also help alleviate and spread the onus of housing issues for the Region as a whole?
I want to interrupt here because you touched on the word “housing”, which is a very hot topic button right now given all the announced projects, funding, etc. Some people may not know this about you, but I know you have been on the board of Greater Victoria Housing Society for some time. Do you want to wade in on this topic a bit?
Well when I say “housing” in the question above I am talking about all supply – market and “affordable”. I say affordable in air quotes as I have always struggled with a sweeping perception of affordable when talking about it in the context of our market. I think any stigma or preconceived notions about what affordable housing means or who the housing end users are should be thrown out. 
If one were to actually sit down and think about who are the groups that need affordable housing it is a very broad and diverse range.  There are seniors who are on pensions, young families who work but just earn a lower household income, students or recent graduates, young professionals and those who physically and/or mentally are unable to work that rely on fixed income assistance. But it also includes those groups that are looking to enter the housing market or downsize that don’t meet the definition of “affordable” subsidized housing but just need a level of market attainability. It runs the gambit.  So as such, the housing supply that is needed should also be very diverse in response that would include subsidized housing models to market housing models.  
I think we tend to think of “affordable” housing in a very one dimensional and generalized manner. What I have learned during my time with GVHS and just through personal experience is that “affordability” is multifaceted and multi-leveled.  What one of the above groups finds affordable is not for another.  What one group finds is an ideal location near schools and employment and affordable – does not work for the other group.  
I see this as an amazing opportunity for private, non profit and public groups to really work together to find creative and successful models to bring housing at all levels to our still undersupplied market.  It can be done in collaboration to make sure we as a Region can maximize efficiencies to bring quality product for our current and future residents.  I am heading into my 6th year with Greater Victoria Housing Society and I think it’s going to be the most dynamic one yet due to the number of projects we have in our pipeline at various stages.  I am really proud how GHVS has always sought to work with all stakeholder groups to meet our mission of providing affordable rental housing in Greater Victoria.  GHVS has been around since 1956 so my 6 years is just a drop in the bucket and I have so much more to learn and hopefully contribute.
I know you have mentioned at past events that you are so excited to see more women in the commercial real estate industry these days.  Was it that different when you started? What were some of the challenges of being a woman entrepreneur in commercial real estate?
That’s an interesting question for me. I started in my career almost 20 years ago. As I mentioned I started on larger asset classes across Canada. So I was in my early 20’s and for the most part traveling on my own and presenting to groups of people. To be honest usually the make up of the room was mainly men and over the age of 40 back then.  I think at that time I had to deal more with challenges of being the youngest in the room and definitely the least experienced in the beginning.  It was often intimidating and stereotypes of being young and female were there for sure. But the advice I tell young women and men that are coming into the business now is that working hard, showing a sincere eagerness to learn and doing your “homework” will always quell any doubt or preconceived notions.  
I don’t dwell on any negative encounters or situations that I find is based on my gender or age. I have always found part of the reason my career path has been so rewarding is I that have faced those types of challenges and I think have handled them in a manner I can always be proud of. 
In terms of challenges though as an entrepreneur – it’s just hard to wear so many hats. Especially at the beginning.  I decided to start my firm when I was pregnant with my son. So I always joke that I had two babies that year.  It was tough for sure – lots of odd work habits such as starting my work day at 8 pm when my son was finally in bed. I think this is a more accepting and progressive decade with parents splitting their time more equally between their career and home. But I also think women are unapologetic if they have a messy house or ordered take out 7 days straight because they were busy following their goals outside the home. I think that is part of the reason why I have seen much more of a female presence in the local real estate industry across all professions. 
But I have to give a shout out to my “village” that help me be able to manage day in and day out.  On the home front, I am fortunate to have a very supportive husband. On the work front I am surrounded by an amazing peer group that I lean on daily. C
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