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Section 5: State Establishes Value

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State’s Appraisals to Establish Values

When the state and the LPA agree that the state will establish right of way values under the waiver provision of the contractual agreement, R/W-PD will proceed with appraising in the usual manner, or by the use of “value findings.” ROW Division HQ approval is not required for additional appraisals. All appraisal fees for appraisals for negotiation will be predetermined lump sum fees, and appraisal fees for preparation for and appearance in testimony will be based on an hourly rate in accordance with the appraiser’s contract in effect at the time of the assignment. Project agreement supplements to appraisal contracts will not be executed nor appraisal assignments made before ROW Division HQ’s release of the project for right of way acquisition.

In addition to the usual instructions, the appraisers must be advised regarding the manner in which the LPA desires to handle right of way fencing and whether the cost of fencing will be a part of the appraisal value. If the cost of right of way fencing is to be included in the approved value, this cost will also appear in the appraisal. If the LPA desires to perform right of way fencing under a lump sum agreement or on an actual cost basis, the appraisers should be instructed that neither a value for existing fences whose use will be restored by the new fence nor any damage for an unfenced condition is to be included in the estimate of value.

The five-year sales data is required on all parcels when federal-aid funds are involved in any phase of the project including construction. Refer to Five-Year Sales History.

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Value Findings

On an inexpensive parcel having a value of $25,000 or less, form ROW-A-7, Real Estate Value Finding Report, rather than a formal appraisal report will be acceptable, provided the compensation does not include damages to the remaining property other than for items measurable by cost to cure. Should there be any damages that cannot be simply documented as cost to cure, form ROW-A-6, Real Estate Appraisal Report, rather than form ROW-A-7 will be necessary.

The valuation process of using ROW-A-7 form is defined as a non-appraisal valuation. The property owner must be informed this method of valuation is not a formal appraisal and does not produce an appraisal report.

If the use of the Real Estate Value Finding Report is being considered to value a parcel and if the parcel to be acquired is known to be more than $10,000 in value, the owner must also approve of its use instead of an appraisal report. It is recommended that the use of this valuation process be considered and discussed during the pre-appraisal contact with the owner.

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  • Instructions
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  • Page 1 - This page identifies the parcel and classifies it as a whole or partial acquisition. The federal-aid project number is required on this page; it should follow the right of way account number. In addition, on the first page, market value is defined and the purpose of the appraisal is stated. The “Certificate of Appraiser” includes the appraiser’s opinion of value as of a date, and the dates which the subject and comparables were inspected. When a report is revised or supplemented and the final estimate of value is affected or changes the date of valuation, a new Page 1 of this form must be submitted to R/W-PD.
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  • Page 2 - Pertinent Photographs of the Subject & Estimated Value of Acquisition - At the top of this page, one photograph will be sufficient and should provide support for the appraiser’s conclusion of value.
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  • At the bottom of the page, the table shows the value of the part to be acquired, the contributory value of any improvements located within the area to be acquired, and a summary of any cost to cure. The resulting value is the estimated total compensation. If needed, the R/W-PD review appraiser can attach additional information. The plat map and field notes should also be included in this report.

The form ROW-A-7 form provides for adequate analysis of the information considered in making the “Value Finding,” including reference to comparable sales and circumstances. Comparable sales data are available to the R/W-PD review appraiser through previously approved project appraisals and other public sources of information. Form ROW-A-5S should be attached for each comparable used to achieve the value conclusion. Additionally, the form ROW-A-7 should include at least a minimum description of the site and improvements to be acquired, along with field notes and plat map. If minor improvements are located within the area to be acquired, cost estimate sources should be identified.

Form ROW-A-7 is to be prepared by a R/W-PD review appraiser or other R/W-PD personnel with sufficient understanding of the local real estate market so as to be qualified to make the waiver valuation. Upon completion of the form ROW-A-7, another R/W-PD review appraiser will prepare the form ROW-A-10 in the normal manner. If the R/W-PD review appraiser preparing the form ROW-A-7 is located in a R/W-PD office that does not employ another qualified R/W-PD review appraiser, the form ROW-A-7 can be reviewed by either a ROW Division HQ review appraiser or another R/W-PD review appraiser. If the review appraiser or agency staff member preparing or reviewing the ROW-A-7 is a state licensed appraiser, then the ROW-A-7 must be supplemented to bring it into compliance with USPAP requirements.

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