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Outsourcing Appraisal Review

The Maine Department of Transportation requested a survey of the other states regarding the following. Other States experiences with outsourcing Appraisal Review. If your ROW manual has the answers to the following questions, please just refer me to that.

  1. Do you regularly contract for Appraisal Review?
    If so,

  2. Generally speaking, does this work well for you?

  3. Is your Review Consultant independent from your fee appraisers, or do you package both appraisal and appraisal review into the same contract?

  4. What sort of check or review of the consultants review do you do, if any?

  5. What sort of contracting do you do for this (project specific, on call, etc)?

ALABAMA
  1. We contract for approximately 25% of our appraisal review.

  2. We are very selective about who does the reviews, but, it does work well.

  3. Usually same contract.

  4. Not any

  5. On call

ARIZONA

  1. The Arizona DOT has in the past used outside fee appraisers for review. The appraisers who responded to the Request for Proposals (RFP) knew they would not able to bid on appraisal work. The outside review appraisers selected were all seasoned appraisers who had done appraisal work for the Department for many years.

  2. The product was good, but the cost was very high even though they bid on a parcel or project basis and not an hourly rate. We did have some trouble receiving timely submittals. At a later date, we hired in-house consultants to do our review work. We put out a request for proposals to the right of way consulting community. Through that process we hired two review appraisers who were ADOT retirees. That too was an expensive contract, but we knew that both individuals where on-site and doing only ADOT business. We have since been able to hire staff review appraisers, but would go back to the in-house consultant scenario when workload requires.

  3. In the past ADOT put out its own RFP - two separate categories for appraisers and reviewers. The State is currently advertising for appraisers and reviewers under the same contact to supply services to all five state agencies that use appraisers. Respondents are able to submit proposals for both appraisal and review work for all 5 agencies using each agency's criteria. At this time ADOT does not plan to use appraisers to review and visa versa.

  4. As to review of the consultant's work, we did not other than one or two members of R/W senior management would read the reviewer's report, ask any questions they had, and then accept the appraisal as the offer amount.

  5. Once we advertise and have a list of appraisers and reviewers, the contract is good for 3-years and functions as an on-call list.

ARKANSAS

Arkansas does not outsource any appraisal review work.

CALIFORNIA

  1. NO

  2. Generally speaking, does this work well for you?

  3. Our appraisals and appraisal reviews are completed by in-house staff.

DELAWARE

  1. YES

  2. We have only been doing it less than six months, but it has worked out better than expected. Beware its expensive though

  3. YES

  4. We always have our Chief Review Appraiser review their work

  5. We do a RFP for 3 years on an as needed basis.

FLORIDA
  1. Only three districts from a total of eight currently use fee review. One of the three almost exclusively uses fee review due to a limited staff. The remaining two districts will use fee review as the workload dictates. Usually when major project come on line at the same time.

  2. Generally, fee review has met with mixed results or success. However, it usually depends on the complexity of the project, experience of the fee reviewer, and how proactive the district review staff members are in the initial stages of the project. Some additional issues concerning this matter are as follows:

    • It takes time to train sometimes inexperienced fee reviewers. It should be noted that the ideal fee reviewer usually is a past FDOT staff reviewer.

    • Fee reviewers tend to spend less time on the appraisals in ensuring a quality product, since time is money. If the appraisal work is below standards, chances are the review will also be below standards or requirements. The key here is to hire the most experienced appraiser, with an equal or more experienced fee reviewer.

    • Complex appraisals should be reviewed by the most experienced staff reviewers. Noncomplex appraisals, and large volume of work are ideal situations for fee review.

    • Fee review can work with proper training, and supervision of the right fee reviewer.

    • There does exist the potential for conflicts of interest between fee reviewers, and appraisers who may be friends or peers.

  3. Fee review is usually kept separate of the appraisal contract. This avoids any appearance of a conflict of interest, and is good business practice.

  4. An administrative review is preformed in order to monitor the quality of the review. Also, a department reviewer must establish recommended compensation. See the attached R/W Manual section 6.1.37 for additional information. http://www.dot.state.fl.us/rightofway/documents/ROWmanual/Acrobat%20files/ch06s01.pdf

  5. Fee review can be project specific or based on individual appraisals. District wide contracts or project contracts are usually used.

HAWAII

We do have not outsourced appraisal reviews.

LOUISIANA

  1. We are currently outsourcing approximately 50% of our appraisal review services.

  2. Outsourcing the appraisal review does get the job done; however, the job is not done as well as when the appraisal review is performed by our own staff.

  3. On those projects where we outsource appraisal review services, we have been contracting both appraisal and appraisal review into the same contract, along with the right-of-way acquisition and relocation assistance services. These projects have been total turnkey projects where all right-of-way services have been included in the contract.

  4. We have been examining (reviewing and correcting) the contracted appraisal review services and find we were actually doing the work for the contract review appraiser. We are now in the process of reducing our examinations (reviewing and correcting) the contracted appraisal review services and requiring the contract review appraiser to provide a quality product that his firm will be able to utilize in their negotiations to acquire the required right-of-way.

  5. As of this date all contracts have been project specific; however, we are currently exploring the possibility of using three year retainer contracts (on call contracts).

KANSAS

  1. In my five years in this chair, I have not contracted out any review work.

  2. With our current work load, this has worked well.

  3. Both are on the same approved list and not separated.

  4. Since our reviews are in house, their work is reviewed that way.

  5. Project specific is our current method. E-Mail ericd@ksdot.org

MASSACHUSETTS

  1. As a general practice, we keep our reviews in house and don't fee them out.

  2. It works for us because our fee appraisers know better than anyone what our requirements are in addition to USPAP and approved appraisal methodology.

  3. As of the last contract when a fee appraiser is approved for our list they are asked if they would like to do reviews as well and if they do are contracted for both at that time.

  4. Again, to this point it has been rare that we fee out reviews but the ones that we have done have still been looked at again by a staff reviewer as a modified desk review.

  5. Project specific

MICHIGAN

The Michigan Department of Transportation Real Estate Division is able to contract out most real estate functions including appraisal review.

  1. We certainly prefer to use MDOT staff whenever possible for appraisal review, but in times of heavy workload out sourcing is our only option to keep project schedules.

  2. It works OK, a staff reviewer is still the best and the most cost effective, but in general the contract review process has been satisfactory.

  3. Yes, and MDOT always uses separate contracts and different appraisal firms for appraisal and review.

  4. MDOT requires the contract review to be prepared in accordance with established MDOT "Appraisal Review Guidelines" (I can fax to you a copy) and "Appraisal Checklist Form" (attached) then a staff review appraiser will approve the contract review and set compensation. When the review contract work is completed, MDOT staff reviewer completes a "Contractor Critique Form" (attached) which allows payment for acceptable review services. This evaluation is mailed to the contractor and will be used by MDOT when there is need to out source appraisal reviews again. A bad rating may not allow the contractor to bid on future work or may require certain conditions corrected.

  5. MDOT uses a master contract that has a term of 3 years (no guarantee of work) which allows the contractor to bid on services. They are sent a bid package with the scope of work, if the successful bidder, they are then authorization to proceed with the assignment (no contracts passing back and forth).

MINNESOTA

  1. We do not regularly contract for Appraisal Review; however, we have done it to handle peak workloads.

  2. It has worked well when we've hired retired Mn/DOT appraisers or trusted fee appraisers exclusively for Appraisal Review. Our experience with fee Review Appraisers, acting as subconsultants to Engineering firms, who also sub out the appraisals to another firm (turnkey acquisition) has not been as successful. We lose control of Review Appraiser selection.

  3. See 2) above. I recommend complete independence.

  4. We do a cursory review and certify the amount/offer

  5. Project and sometimes parcel specific

MISSISSIPPI

  1. Yes, we use the contract review appraisal, when we cannot complete the appraisal review with staff in a timely manner.

  2. Generally speaking, it works very well.

  3. The contract review appraiser is independent of the fee appraisers. We do not "package" the appraisal and appraisal review under one contract.

  4. We perform an administrative review on all contract review appraisals.

  5. We contract for appraisal review on a project specific basis.

NEBRAKSA

Our manual explains the process: http://www.nebraskatransportation.org/roway/pdfs/row-manual/chapter09.pdf

I would like to add that this process was developed essentially for the LPA's and it is our goal to NEVER use a consultant reviewer on a State project. You also know what they say..."Never say Never!"

NEVADA

  1. YES.

  2. Generally speaking, does this work well for you?
    In most instances, some consistency issues.

  3. Both can be in the same contract, but not same firm.

  4. Review for compliance with terms of agreement and consistency.

  5. Project specific and on call

NEW HAMPSHIRE

  1. Because of a hiring freeze and the loss of a staff reviewer, we have been contracting some appraisal review work for the past two years.
  1. It has generally worked well, but given a choice we would rather do the review with staff reviewers. With the consultants we use an RFP process but the fees end up being more expensive than using staff. With staff reviewers it is easier to have high priority assignments given immediate attention. However, without the option of using review consultants it would be difficult to meet project deadlines.
  1. We package both appraisal and appraisal review in the same 3 year contract.
  1. The review consultants email me a copy of the appraisal reviews when mailed to the appraisers.
  1. We use the RFP process for choosing review consultants.

NEW JERSEY

New Jersey DOT has begun using fee reviewers over the past year. Reviews are contracted out separately from the appraisal, and are done on a parcel/project specific basis. Thus far we have primarily relied on retired staff reviewers for this service, however, we have used several of our more experienced consultant appraisers. We are very pleased with the results so far, particularly as related to turnaround time.

NORTH DAKOTA

North Dakota does not contract for Appraisal Review. All Appraisal Reviews are done in house.

OHIO

  1. Yes

  2. Yes

  3. Ohio DOT maintains separate pre approval lists for appraisers and appraisal reviewers. Ohio DOT generally engages appraisers and reviewers under separate contracts. However, if a prime consultant was hired to do the project management of a larger project, that prime could only control appraisal or review. The prime could not control both. In any event, ODOT would establish FMVE and not the prime.

  4. Ohio DOT staff people do a percentage review of consultant reviewers. That is, a certain percentage of reviews are again analyzed by Ohio DOT staff to ensure that the appraisal review process is compliant with 49 CFR 24.103 and 104 as well as Ohio DOT P/P. Additionally, if an appraisal is rejected, the reviewer is mandated to create a deficiency letter that 1) identifies the deficiency, 2) cites the policy, procedure, USPAP, or appraisal theory or technique that has been violated and 3) gives guidance and direction to correct the problem.

  5. Unbid personal service contracts - a limit of $50,000 per year per vendor, or, a programmatic contract that is advertised and approved by the State Control Board - good for 2 years and has a stipulated spending authority to not exceed a certain amount.

SOUTH CAROLINA

  1. We have in the past used review appraiser for a large portion of our review work, however we are currently moving to do more of this work with staff.

  2. In some cases we have had no problems with this, and in others we do not feel that the same quality of work was provided by the fee reviewer as we receive from staff.

  3. We have handled both in the same contract and as separate contracts. The contract method has not created any problems.

  4. Primarily, the individual assigned to provide approval of the just compensation offer provides a cursory review of the appraisal, with the major focus on damage issues and consistency.

  5. We have contracted on a project specific basis or through our On-call right of way consultant contract which typically are turn key projects.

SOUTH DAKOTA

South Dakota does not contract for appraisal review services

UTAH

  1. Generally we try to do our own reviews in house but there may be times when our in house review appraisers are to busy to meet the scheduled turn around time and then we contract with those individuals on UDOT's approved consultant pool who have been qualified to do appraisal reviews for the department.

  2. Yes it works well for UDOT. We are able to meet our turn around time requirement which helps keep the project on schedule.

  3. When we go to the outside for our appraisal review, the reviewer would be independent from the appraiser. If we contract with a reviewer, we make sure they are two different firms and that they are both qualified and have been approved for our consultant pool list to do the work.

  4. One of the two team leaders or the right of way project manager for the subject project will do spot reviews of the reviews the independent review performed to make sure they meet USPAP standards.

  5. UDOT doesn't keep appraisers on call to do reviews if needed. We have an approved consultant pool that we can draw from pre-qualified individuals or firms for specific discipline (Appraisal Reviews is one of the discipline).

VERMONT

  1. Yes.

  2. Yes.

  3. Yes. We retain separate firms for appraisal and appraisal review.

  4. The state's reviewer makes the final value determination of value, so he/she reviews the reviews.

  5. We have retainer contracts specifically for review services.

WASHINGTON

  1. Washington DOT is just beginning to contract out for Appraisal Review. We have used a fee review appraiser on 3 projects so far. Each project was less than 10 parcels. The only fee review appraiser we have used on all 3 projects, was a retired DOT Review Appraiser –in fact, he was the head of the DOT's statewide appraisal program before he retired.

  2. We are anticipating that this practice will help get us through an upcoming heavy workload.

  3. Except for one instance, the contract for appraisal review was independent from the appraisal contract. In the future, the contract for appraisal review will almost always be independent from the appraisal contract

  4. Right now, we do a cursory check. If the workload is too heavy for our staff review appraisers, then they really don't have time to do an in-depth check of the work by the fee review appraiser. The fee review appraiser is not authorized to commit funds for the Washington DOT, so someone from our agency must authorize Just Compensation based on the review. That agency person generally checks to make sure the review is reasonable before authorizing the compensation.

    In the future, we will be setting up a Quality Assurance program to do a random review of the reviews on a quarterly basis.

  5. In the past, we have contracted for specific projects. We are currently in the process of setting up on-call contracts with review appraisers statewide. When we use these contracts, we must set up Task Assignments. These Task Assignments may be either project specific or they may be for use "as needed". http://www.wsdot.wa.gov/real_estate/

WEST VIRIGINIA

  1. Yes, we regularly contract for appraisal review. This contracting is done by the DOT and has never been let out as part of a "turn-key" right of way consulting contract.

  2. Process seems to work well. We use only pre-approved individuals with substantial DOT staff experience. Additionally, by keeping this function separate from any right of way consultant contract, it allows for completion of appraisals and the review function under partial FHWA authorization, which accelerates these processes without having to wait for full authorization.

  3. In order to maintain separation between these functions, the review contracts are separate from those of the fee appraisers.

  4. All appraisals which have been reviewed by a fee reviewer are administratively reviewed by WVDOT appraisal personnel prior to being approved for negotiation. Spot field reviews are also completed by WVDOT appraisal personnel on a limited basis.

  5. Contracts with fee reviewers are classed as Professional Individual Services Contracts that are project specific.

WISCONSIN

To date, Wisconsin has not yet consulted out its appraisal review process.

WYOMING

  1. NO

  2. N/A

  3. N/A

  4. N/A

  5. N/A

Updated: 04/02/2013
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