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Memorandum - Appraisal Review

Subject: INFORMATION: Appraisal Review Date: April 25, 2012
ORIGINAL SIGNED BY: Nelson Castellanos

From: Nelson Castellanos
Director, Office of Real Estate Services
In Reply Refer To:: HEPR-10
To: Division Administrators
Directors of Federal Lands
ATTN: Division and Federal Lands Realty Officers

The purpose of this memorandum is to provide information on the requirements for an appraisal review.

In an effort to cut costs, a number of States are questioning the need for an appraisal review and, in some cases; they are debating whether or not appraisal reviews are required under the Federal-aid Highway program. Please note that 49 CFR §24.104 requires the State DOTs to have an appraisal review process and that it be performed by a qualified review appraiser. 49 CFR §24.103(d) requires the State DOT to establish criteria for determining the minimum qualifications and competency of review appraisers. There is, however, misunderstanding over the level of appraisal review that may be appropriate in any given circumstance. The regulation states that "the level of review analysis depends on the complexity of the appraisal problem." Appraisal review is not a "one size fits all" concept. Simple appraisals only require simple reviews done by a qualified review appraiser.

If the intent is to reduce cost and expedite the delivery of the project, there are valuable tools available from the Every Day Counts tool box. For instance, the waiver valuation has been used effectively in many jurisdictions to contain cost and to accelerate project delivery. Waiver valuation is defined as "…the valuation process used and the product produced when the Agency determines that an appraisal is not required…" Waiver valuations may be used when right of way acquisitions are uncomplicated and of low value. The intent is that non-appraisers make the waiver valuations, freeing up appraisers to do more complex work. Waiver valuations are not appraisals and, as such, are not subject to appraisal review.

Please share this memorandum with your State and local partners and remind them that the review of appraisals is required by 49 CFR §24.104 but that such review does not have to be a burdensome task.

Updated: 04/02/2013
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