THE CONSULTING PROCESS

DEFINITION
The Realty Estate Consulting Process may be
defined as the professional tool in pursuing a real estate
consulting engagement to ensure an orderly method of
solving a real estate problem or helping a client reach
decision on alternatives available. The Consulting Process
is a distinct and systematic method by which competent
consultants apply their knowledge and skills to the
solution of real estate problems. It is one of the sources
of standards for practice common to the different
consulting disciplines and, therefore, unifies the
disciplines into a single profession.
DEFINITION
The Consulting Process is a model for
resolving all kinds of real estate problems,
regardless of whether the subject matter is real
property, personal property, or a business. The
Consulting Process provides the framework for
developing and reporting any type of realty
consulting. The recommended standard steps
involved in this process are summarized in the
accompanying outline or flowchart.
DEFINITION AND TERMS OF
ENGAGEMENT
 DEFINITION AND TERMS OF ENGAGEMENT
Identification of Problem and Objective Standard
1 addresses the concept of identifying the client’s
objective or purpose and the problems and issues
raised for solution or decision making. There is an
important difference between performing an impartial
consulting service as a disinterested third party that
responds to the client’s stated objective and
performing a consulting service that is intended to
facilitate the achievement of the client’s objective,
such as that performed by an appraiser, broker, or
other licensed specialists.
DEFINITION AND TERMS OF ENGAGEMENT
Defining the real estate engagement includes the
initial identification of the client problem and
statement of the objective and purpose for which the
consulting engagement is to be carried out. The
consultant and the client must determine as
completely as possible the questions to be raised, the
realty problems and issues to be solved, and the
ultimate goals to be achieved
 DEFINITION AND TERMS OF ENGAGEMENT
Initial interviews with the client by the consultant are
necessary to determine as many of the client’s objectives and
acceptable alternatives. It is essential to know the client’s attitude
about the project and the problems. Is the attitude positive, or
does the client have some doubts and questions about the
engagement? What long-term or short-term goal the client is
attempting to achieve, and what priorities should be considered?
For example, the engagement may be to find a suitable location
for a project. If a location has been found, the engagement may
be to help the client decide what kind of building should be built
on the site and the probable market and the prospective tenants
for the proposed project. Finally, the consultant may assist in the
planning of an entire proposed project.
 DEFINITION AND TERMS OF ENGAGEMENT
Financial, social and ethical issues At the start of the
engagement discussions, it is important to know from the
client the financial status of the project. Is there adequate
financing available from equity and mortgage loan, or will the
project be financed entirely by mortgage loan. If there are
equity partners, the consultants may consider the after-tax
impact to partners in different tax brackets. In the case of
limited partnerships, syndications, or institutional investors on
a cash basis, the consultant’s concern becomes one of cash
flow to property rather than cash flow to equity. These
matters relate directly to the time involvement of the
consultant and the final recommendations.
CONSTRAINTS IN THE
ENGAGEMENT
 CONSTRAINTS IN THE ENGAGEMENT
In determining the time frame involved,
consideration should be given also to the time of
submission of various parts of the report and ascertain
whether the entire engagement will be completed as a
single and final report.
A major project to be constructed in stages over a
number of years would involve detailed analysis of the
initial stage and consideration of the potential impact
of the later stages. The consultants may be called upon
for analysis of the timing of the later stages.
 CONSTRAINTS IN THE ENGAGEMENT
Physical and Time Considerations At the beginning of the
engagement process, it is necessary to determine what kind of
property is involved. Is it proposed construction, an existing
distressed project, project to be improved, demolished, rented
or sold?
A proposed construction or property that is to be altered
or expanded may very well involve a long-term commitment on
the part of the consultant. An existing project may involve only
an investment analysis to determine whether or not the
financial goals of the client can be achieved in the project. Any
unique or unusual features of the property might influence the
issues to be solved and the questions to be answered.
THE CONSULTANT AS A
COORDINATOR
 THE CONSULTANT AS A COORDINATOR
Coordination and Communication An
engagement involving a proposed construction would
normally require meeting with the client and the
architect in the earliest stages of preliminary
architectural scheme and plans. Such meeting will
determine the eventual success of the entire
construction and market absorption program. The
coordinating relationship is an important part of the
definition of the engagement as this will also affect the
fees to be charged by the consultant.
 THE CONSULTANT AS A COORDINATOR
The initial step of a consulting process also includes
consideration of the resources and the personnel that will be
needed. Such personnel requirement includes the staff of the
consultant and outside specialists such as architects, accountants,
engineers, contractors, management personnel, landscape
architects, surveyors, demographics, ecologists, and lawyers. It is
critical to have an understanding what data the consultant must
generate and what data the client will furnish. The set of plans
and specifications on proposed projects or on projects to be
altered or expanded must be available, though a final set of
working drawings may not be required. Copied of contracts with
the lessees and other parties may affect the work or
recommendations of the consultant.
PLANNING AND BUDGETING
THE ENGAGEMENT
PLANNING AND BUDGETING THE ENGAGEMENT
The consulting process includes engagement
budget for in-house manpower, outside specialists,
special tasks of individuals, and a job plan and work
flowchart.
Most experienced consultants have in-house data
files on similar types of project where reference can be
had for demographic information, construction cost
data on similar projects, revenue and expense data for
comparative analysis, and information on public
utilities, much of supplementary data and information
for the engagement come from such in-house file.
THE ENGAGEMENT CONTRACT:
ESTABLISHING THE FORMAL
CONSULTING RELATIONSHIP
THE ENGAGEMENT CONTRACT: ESTABLISHING THE FORMAL
CONSULTING RELATIONSHIP

In order to further insure the satisfactory implementation of

the engagement, it is important to establish the consulting
relationship with the client, particularly the agreement reached
exactly as (1) what services the consultant will provide (2) in what
form, and (3) at what time. This understanding will clearly define
the responsibility of the client and the consultant. Likewise, it is
important to agree on the fee or fees for the service contract and
the incidental expenses to be borne by the client to avoid
misunderstanding, the fee may be in a lump sum or on a per diem
or hourly basis.
THE ENGAGEMENT CONTRACT: ESTABLISHING THE FORMAL
CONSULTING RELATIONSHIP
A retainer basis may be appropriate in some cases,
especially in major engagement involving long-term
consultation or where the client’s credit and financial standing
is unavailable.

The schedule of fee payment may be in periodic retainer

fee as a part of the total fee, plus progress payments. With
well-establish clients or in small engagements the entire fee
may be paid after completion of the report
PLANNING THE ENGAGEMENT
EXECUTION
 PLANNING THE ENGAGEMENT EXECUTION
When the consulting engagement contract is signed, the
consultant prepares the plan to implement the engagement,
beginning with the setting of deadlines and coordinating the
effort of the staff and outside services. It is desirable to set
review points to see if the tasks are on schedule and to check
the quality of the works completed to date. This review
technique will determine if mid-project changes are needed
to produce on time the desired quality results. A review
technique frequently used for big engagements is the so-
called PERT (Project Evaluation and Review Techniques) or the
CPM (Critical Path Method) network.
EXECUTING THE PLAN OF
ENGAGEMENT
 EXECUTING THE PLAN OF ENGAGEMENT
Performance of the engagement calls for the compilation of all
required data from both internal and external sources and the
development of relevant and useful information from such data. As
necessary data and information are compiled, the analysis work of the
engagement is undertaken. The data and information are analyzed
from the standpoint of quality, quantity, and relevance to the
engagement. Data processing frequently involves computer analysis in
the special program developed for the engagement. Unlike real estate
appraisers’ fairly standardized format, consulting works are rarely
uniform with each other consulting works done in the past. Although
there may be a considerable degree of similarity among consulting
engagements, a particular real estate problem or issue will require the
development of a specific program for data and information analysis.
 THE CONSULTING REPORT:
PREPARING, REVIEWING AND
PRESENTING
 THE CONSULTING REPORT: PREPARING, REVIEWING
AND PRESENTING
Preparation The preparation of the actual report
may begin early in the plan of execution with the
preparation of supporting tables, schedules and other
illustrative materials. No part of the report may be
prepared until the completion of the relevant
conclusions and supporting materials. The final report
should be carefully prepared and edited to assure that
it answers the main problem and issues, and that the
conclusions and recommendations will assist the client
in making a prudent decision
 THE CONSULTING REPORT: PREPARING, REVIEWING
AND PRESENTING
The report should comply with all the contractual
obligations pertaining to the purpose of the
engagement, timing, and the form of presentation. The
volume of data and information in the report is
dependent on the nature of the problem and the form
of report agreed upon. A verbal presentation of the
written report may contain less data but with
reasonable explanation of the kinds of data analysis
used, with minimum but significant graphs, charts,
photographs, and other visual aids
 THE CONSULTING REPORT: PREPARING, REVIEWING
AND PRESENTING
Reviewing All computations in the report should
undergo accuracy tests. A final check of the logic and
reasonableness of the conclusions and
recommendations should be made (by a review panel
for big engagements) to assure that the report and all
its findings have considered the main purpose of the
engagement. Sometimes, the final report is preceded
by meeting with the client before this is finalized and
submitted.
 THE CONSULTING REPORT: PREPARING, REVIEWING
AND PRESENTING
Presenting The written report is presented in pre-
set appointment with the client. The presentation is
given completely but briefly, with adequate time
allowed to accommodate any questions from the
client. The written report should adequately convey
the findings in accordance with the definition of the
agreement and should always reflect the professional
integrity of the consultant.