Friday, September 5, 2014

How to Vet CAMA Consultants


As the vast majority of the large-to-medium jurisdictions started moving toward mass appraisal, the need for the Computer Assisted Mass Appraisal (CAMA) consultants skyrocketed, giving rise to many consultants that are totally unqualified. It is therefore critical to vet the final mix (of four or five viable candidates) before hiring one. Additionally, the final candidate should be rigorously investigated before a contract is offered. Since the large CAMA vendors tend to package the modeling services with their in-house assessment and modeling software systems instead of generally offering plain vanilla consulting services, the focus here will be on the individual consultants and the small partnership practices headed by one or two well-known experts, collectively known as consultants in the industry. Here is the process to vet those consultants before they are hired:

1. Check Their Educational Background: As the CAMA movement gained steam in the 80’s and 90’s, many entrepreneurial assessors and analysts jumped ship to take advantage of this potentially lucrative business. Obviously, not all of them were qualified – many did not even have an undergraduate degree, let alone an advanced degree in quantitative sciences. Mass appraisal modeling is essentially a game of advanced quantitative modeling (more than just running a few regression equations and tinkering with some GIS polygons).While CAMA consultants need to thoroughly understand the assessment practices, they must be basically qualified Quants to wear this hat. So, it is essential that the vetting authority zero in on those who have at least a Master’s degree, preferably a PhD, in hard sciences (physics, math, stat, etc.) or engineering (operations research or industrial engineering) or economic sciences.Qualified economists tend to make great CAMA consultants. I must admit, two of my favorite consultants in this business come from economics. While GIS and CAMA go hand in hand, GIS specialists make good co-consultants.

2. Verify Their Consulting Background: Assuming a mix of veterans is considered, it s crucial to check their consulting record. Instead of just going by their association or BBB records, it’s imperative to talk to the folks at their current and prior service nodes to find out more about their performance record. In addition to the quality of the deliverables, the timeliness of deliveries and the maintenance support must be investigated. Often times, CAMA consultants are hired to teach the in-house analysts and assessors the modeling process so they could develop their own models in-house, without having to perennially depend on the consultants and vendors. In that instance, it is necessary to find out if the consultant tried to behave more like a salesperson than a teacher, which would provide an assurance as to the professionalism of the consultant. Obviously, it’s always good to stay away from the consultants who are also employed full-time elsewhere. If and when one would need them urgently, they would be attending their office meetings to protect their jobs, forcing the client to look for a swap, meaning often starting afresh.

3. Check out Their Commercial Modeling Expertise: Most CAMA consultants specialize in residential modeling, leaving the commercial population for the in-house assessors to handle. Unlike the residential properties, modeling the commercial properties is very specialized and thus requires additional expertise in income, risk and benchmark modeling. Since the commercial models also help generate a set of use-oriented standardized metrics (rental rates, vacancies, expense ratios, cap rates, etc.), expertise in metric development is also critical. Of course, if the RPF calls for modeling both residential and commercial properties, then adequate time must be spent in vetting their commercial expertise as well. This is one area where small partnership practices might be more valuable than individual consultants as those partnerships are often formed with complimentary expertise. One might come across such practices – from trade journals or referral services – where one partner specializes in residential modeling while another concentrates on commercial. 

If modeling experts are sought, the vetting authority should not be fooled by consultants’ secondary expertise like data collections, sales ratio studies, hearing representations, etc. Instead, maximum focus must be placed on discerning the expanse of their modeling experience as consultants, not just as an analyst/employee before the switch. Modeling expertise with a similar jurisdiction is ideal. If the concerned jurisdiction happens to be a built-up suburban county, it’s a good idea to develop a mix of alternatives having direct consulting experience with similar counties. Similarly, if the RFP is for commercial properties in a large city, it will be imprudent to settle for someone with commercial expertise in much smaller towns and cities. Even a few contiguous blocks in Midtown Manhattan could be nerve-wrecking for them.

4. Interview Them Face-to-face: If the hiring is for developing models and producing values for the roll (not just to teach a class or undertake a sales ratio or equalization study) and assuming that the hiring process is not a farce (politically or personally connected, etc.), the final few must be invited to come for face-to-face interviews irrespective of their names in the business. Of course, since most of them would be out-of-state candidates, one has to be flexible in terms of the interview schedule. Those who still insist on phone interviews only must be passed by all means (too arrogant about their standing in the industry or too busy with their current schedule – neither a plus for the assessing department nor will it protect the taxpayers).

5. Have Outside Experts Lead the Interviews: The reason this consultant is hired stems from the basic fact that the department lacks in-house expertise to develop the model. Therefore, it is essential to try to pull together a team of expert interviewers from the local universities (professors from the RE economics dept), neighboring jurisdictions having in-house CAMA experts, and other non-competing experts (mostly quantitative analysts and researchers from local banks and institutes). In fact, considering this is a local government request, most of them would be honored to comply. The department will thus get honest opinions and true results. The recipe for disaster is the body of unqualified interviewers – it happens everyday, everywhere! Again, if the vetting is performed independently and knowledgeably, the department will have a much higher chance of getting a qualified consultant who would then meaningfully deliver as per the RFP. Professionally videotaping all such interviews might add significant credence to the department and setting a good example for others to follow in similar situations.

6. Capability to Deliver on Add-on Services: Often, the RFP requires some add-on technological services ranging in scope from working with the in-house IT to upload the new CAMA GIS maps on to the client site or publishing the roll on their site, etc. In those instances, the consultant’s capability to deliver on those services must also be checked. If the consultant has not performed such add-on services before, the department definitely does not need to be the guinea pig either. It is however understandable that the individual consultants would team up with other technology outfits to provide such add-on services. Therefore, their past performance as a team must be properly examined. As one can imagine, the consultant-generated values often become the baseline values and get anchored (in some adjusted form) for a number of years, so it is imperative to hire the right consultant to develop those values. Moreover, since employees tend to develop personal relationships with the consultants, it is often difficult to cut the cord!


Thanks,

Sid Som
President
Homequant, Inc.
contact@homequant.com 

Note - This book is available on Kindle (Amazon - query 'Sid Som').




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