BPO

[Anthem]

Ok I don't do BPO's and I have not really kept up with the regulations on BPO's.

I vaguely remember seeing a rule that said you could not use a BPO in NC to fund a loan.

I just hung up with an agent that I was scheduling an REO appraisal with who told me that the RE commission released something a week or so ago that said Realtors in NC cannot do BPO's for banks period only for a potential listing (which is funny because many times when doing an REO BPO the agent stands a chance to get the listing)

Typically lenders get an appraisal and a BPO on REO properties so she was wondering how that would effect us, of course I know nothing except that I have an order to do an REO appraisal.

Did I miss some big changes in regards to BPO's in NC?

 

[Bob Ipock]

The "funding a loan" stuff is a myth. The "gettiong a listing" is truth.


CMA Policy Now In Appraisers Act


The General Assembly has amended the North Carolina Apprai-
sers Act to define the role of real estate brokers and salespersons in performing comparative market analyses (CMAs).

The policy of the North Carolina Appraisal Board is now stated in the law; namely, that real estate brokers and salespersons may perform CMAs for compensation or other valuable consideration ONLY for their prospective or actual real estate clients or for real property involved in an employee relocation program. They may not perform CMAs for any other purpose-especially lending purposes.

A comparative market analysis is defined as "the analysis of sales of similar recently sold properties in order to derive an indication of the probable sales price of a particiular property by a licensed real estate broker or salesperson." Although the Act does not define the term "broker price opinion (BPO)", a BPO is essentially a CMA if it is based upon recent sales of comparable properties.


Practice Tip
When performing a comparative market analysis or broker price opinion for a client or potential client, be sure to:

Document the recent sales of comparable properties upon which you base your analysis.

Identify the results of your analysis as a "probable sales price" only and not the "market value" or an "appraisal".

State in your written report that "This is a comparative market analysis and not an appraisal and should not be used for lending purposes."

 

[Bob Ipock]

Broker Price Opinion revisited



The North Carolina Appraisal Board has reconsidered its position concerning "broker price opinions." Earlier this year the Board adopted the view that except when representing a buyer or seller during the ordinary course of a real estate transaction, a licensed real estate broker or salesman must also be a state-licensed or state-certified appraiser to provide his or her opinion of the value of an identified parcel of real estate. The Board thus took a very strict view of the exception for comparative market analyses built into the still new appraiser licensing statutes. But after further consideration of the question and more closely examining customary practice, the Board has somewhat relaxed its view.

Real estate brokers and salesmen occasionally are asked to assist buyers, sellers, and others in determining the probable sales prices of particular parcels of real property. Under certain circumstances, this type of analysis has come to be called a "broker price opinion." The question is, when may a person not licensed or certified by the Appraisal Board lawfully perform a broker price opinion?

Under the North Carolina Appraisers Act, a real estate appraisal is any analysis, opinion, or conclusion as to the value of an identified parcel of real property when performed for compensation. The statute requires that all persons who act as real estate appraisers or hold themselves out to be appraisers must be licensed or certified by the Board.

Specifically exempted from the requirements of the law is a duly licensed real estate broker or salesman who performs a comparative market analysis - provided the licensee does not represent himself or herself to be an appraiser.

Although the statute does not define the term "broker price opinion," it does define a comparative market analysis to be an analysis of sales of similar recently sold properties, performed by a broker or salesman for the broker's or salesman's principal, to get an indication of the probable sales price of a particular property. Therefore, when a broker price opinion is based upon recent sales of comparable properties, it is, essentially, a comparative market analysis.

Under the Board's newer view, a licensed real estate broker or salesman may perform a comparative market analysis (or broker price opinion) not only for his or her actual client in a real estate brokerage transaction, but also for prospective clients such as buyers or sellers just entering the real estate market, or banks and relocation companies who must regularly sell real property through a broker's services. The Board also has expanded its view of the meaning of the word "principal" to include any person or entity whom the real estate licensee reasonably anticipates may become a client for brokerage services. This view more closely conforms to customary practice in the real estate industry.

In Conclusion

To perform a comparative market analysis or comparable sales based broker price opinion for his or her principal for compensation, a licensed broker or salesman need not also be a state-licensed or state certified appraiser - if the principal is actually the licensee's client for brokerage services or if the licensee reasonably believes the principal may become his or her client.


Practice Tip

 

[Couch Potato]

Ok I don't do BPO's and I have not really kept up with the regulations on BPO's.

I vaguely remember seeing a rule that said you could not use a BPO in NC to fund a loan.

I just hung up with an agent that I was scheduling an REO appraisal with who told me that the RE commission released something a week or so ago that said Realtors in NC cannot do BPO's for banks period only for a potential listing (which is funny because many times when doing an REO BPO the agent stands a chance to get the listing)

Typically lenders get an appraisal and a BPO on REO properties so she was wondering how that would effect us, of course I know nothing except that I have an order to do an REO appraisal.

Did I miss some big changes in regards to BPO's in NC?

You did not miss any changes, the rules are just as they have always been. What changed was a clear statement of the rules in the Real Estate Bulletin that affirmed it was considered a violation of the real estate license law in NC to violate a rule of the NCAB. In other words, the NCAB said, this is what the law states, and NCREC said, your right.