1. (1) Standards of appraisals, appraisal reviews, and waiver valuations: The agency acquiring real property has a legitimate role in contributing to the valuation process, especially in developing the scope of work and defining the valuation problem. The scope of work, format, and level of documentation for an appraisal, or other valuation, under this section depends on the complexity of the valuation problem. This part sets forth minimum standards for appraisals and appraisal reviews consistent with established, commonly accepted, and nationally recognized appraisal practice. In line with 49 C.F.R. 24.102 (c)(2), the lead agency shall develop minimum standards for waiver valuations for acquisitions which, have a low value and uncomplicated valuation problem, and therefore, do not require the in-depth analysis and presentation necessary in an appraisal. An appraisal and appraisal review shall be prepared for all other acquisitions, unless the owner is donating the property and releases the agency from its obligation to appraise the property.

   1. (a) An appraisal must contain sufficient documentation, including valuation data and the appraiser's analysis of that data, to support the appraiser's opinion of value. At a minimum, the appraisal shall contain the following items:

      1. (i) The purpose and/or the function of the appraisal, a definition of the estate being appraised, and a statement of the assumptions and limiting conditions affecting the appraisal.
      2. (ii) An adequate description of the physical characteristics of the property being appraised (and, in the case of a partial acquisition, an adequate description of the remaining property), a statement of the known and observed encumbrances, if any, title information, location, zoning, present use, an analysis of highest and best use, and at least a five-year sales history of the property.
      3. (iii) All relevant and reliable approaches to value consistent with commonly accepted professional appraisal practices. When supported by market data, the agency, at its discretion, may accept an appraisal report using only one approach to value. If more than one approach is utilized, there shall be an analysis and reconciliation of approaches to value that are sufficient to support the appraiser's opinion of value.
      4. (iv) A description of comparable sales, including a description of all relevant physical, legal, and economic factors such as parties to the transaction, source and method of financing, and verification by a party involved in the transaction.
      5. (v) A statement of the value of the real property to be acquired and, for a partial acquisition, a statement of the value of the damages and benefits, if any, to the remaining real property, where appropriate.
      6. (vi) The effective date of valuation, date of appraisal, signature, and certification of the appraiser.
      7. (vii) Documentation that the owner, or the owner's designated representative, was given an opportunity to accompany the appraiser during the appraiser's inspection of the property.
      8. (viii) Identification of items of personalty in the acquisition area and whether they are owner- or tenant-owned. Items of realty should also be labeled as owner- or tenant-owned.
      9. (ix) The appraiser identifies and recommends the existence of an uneconomic remnant, if applicable, and the appraisal report shall indicate a value for the uneconomic remnant as well as the acquisition area.
      10. (x) If there is a displacement of an owner or tenant, the short-term fair market rental rate for the property shall be identified in the appraisal.

   2. (b) The agency shall have an appraisal review process and, at a minimum:

      1. (i) A qualified review appraiser shall examine all appraisals to ensure that they meet applicable appraisal requirements and shall, prior to acceptance, seek necessary corrections or revisions. The review appraiser shall determine whether the appraiser's documentation, including valuation data and analyses of that data, demonstrates the soundness of the appraiser's opinion of value. The review appraiser shall identify each appraisal report as recommended (as the basis for the establishment of the amount believed to be just compensation), accepted (meets all requirements, but not selected as recommended or approved), or not accepted.
      2. (ii) If the review appraiser is unable to approve or recommend approval of an appraisal as an adequate basis for the estimate of just compensation, and it is determined that it is not practical to obtain an additional appraisal, the reviewing appraiser may develop appraisal documentation in accordance with (a) of this subsection to support an approved or recommended value. The agency may determine whether a second review is needed if the first review appraiser establishes a value different from that in the appraisal report(s) on the property.
      3. (iii) The review appraiser shall prepare a written report that identifies the appraisal reports reviewed and documents the findings and conclusions arrived at during the review of the appraisal(s). Any damages or benefits to any remaining property shall be identified. The review appraiser shall also prepare a signed certification that states the parameters of the review, the approved or recommended value and, if the review appraiser is authorized to do so, the amount believed to be just compensation for the acquisition.
      4. (iv) The review appraiser will identify and recommend the existence of an uneconomic remnant, if applicable.
2. (2) Influence of the project on just compensation: The appraiser shall disregard any decrease or increase in the fair market value of the real property caused by the project for which the property is to be acquired, or by the likelihood that the property would be acquired for the project, other than that due to the physical deterioration within the reasonable control of the owner.
3. (3) Owner retention of improvements: If the owner of a real property improvement is permitted to obtain the right to remove it in whole or in part from the project site, the amount to be offered for the interest in the real property to be acquired shall not be less than the difference between the amount determined to be just compensation for the owner's interest in the real property and the salvage value of the retained improvement. The salvage value (defined in WAC 468-100-002(25)) of the improvement to be removed shall not be included in the agency's payment.

4. (4) Qualifications of appraisers, review appraisers, and waiver valuation preparers:

   1. (a) The funding agency shall establish criteria for determining the minimum qualifications and competencies of appraisers and review appraisers. Qualifications shall be consistent with the scope of work for the assignment. The agency shall review the experience, education, training, certification/licensing, designations and other qualifications of appraisers and review appraisers, and use only those determined by the agency to be qualified.
   2. (b) If the agency uses a contract (fee) appraiser or appraisal reviewer to perform the appraisal or review, such person shall be a state-certified residential real estate appraiser or a state-certified general real estate appraiser through the Washington state department of licensing.
   3. (c) The person performing the waiver valuation must have sufficient understanding of the local real estate market to be qualified to perform the waiver valuation. The agency representative making the determination to use the waiver valuation option must understand valuation principles, techniques, and use of appraisals to be able to determine whether the valuation of the proposed acquisition is uncomplicated and has a low fair market value.

5. (5) Conflict of interest: The appraiser, review appraiser, or waiver valuation preparer shall not have any interest, direct or indirect, in the real property being valued for the agency. Compensation for developing an appraisal or waiver valuation shall not be based on the reported opinion of value.

   No person shall attempt to unduly influence or coerce an appraiser, review appraiser, or waiver valuation preparer regarding any valuation or other aspect of an appraisal, appraisal review, or waiver valuation. Persons functioning as negotiators may not supervise or formally evaluate the performance of any appraiser, review appraiser, or waiver valuation preparer performing valuation work.

   An appraiser, review appraiser, or waiver valuation preparer may be authorized by the agency to act as a negotiator for acquisition of real property for which that person has performed a valuation, only if the offer to acquire the property is $15,000, or less. Agencies who wish to use this same authority at a higher dollar threshold must comply with 49 C.F.R. 24.102 (n)(3)(i), (ii), and (iii) and 49 C.F.R. 24.102 (n)(4).

6. (6) Delays in offering just compensation or other changes: An update to the valuation, or an entirely new valuation, may be needed if a significant delay has occurred since the time of the valuation or if new information or changes to the property are evident.

[Statutory Authority: RCW 8.26.085. WSR 26-11-009, s 468-100-103, filed 5/11/26, effective 6/11/26. Statutory Authority: Chapter 8.26 RCW. WSR 89-17-048 (Order 121), § 468-100-103, filed 8/14/89, effective 9/14/89.]