Make sure you’re not violating the REALTOR® Code of Ethics when creating broker price opinions and comparative market analyses. Standard of Practice 11-1 says that when REALTORS® prepare these types of opinions, they must:
- Be knowledgeable about the type of property being valued
- Have access to the information and resources necessary to formulate an accurate opinion
- Be familiar with the area where the subject property is located
Unless a lack of any of these is disclosed to the party requesting the opinion in advance.
If you aren’t pursuing a listing or assisting a buyer with a purchase offer, you must include the following information, unless the party who requests the opinion requires different information.
- Identification of the subject property
- Date prepared
- Defined value or price
- Limiting conditions, including statements of purpose(s) and intended user(s)
- Any present or contemplated interest, including the possibility of representing the seller/landlord or buyers/tenants
- Basis for the opinion, including applicable market data
- If the opinion is not an appraisal, a statement to that effect
- Disclosure of whether and when a physical inspection of the property’s
exterior was conducted - Disclosure of whether and when a physical inspection of the property’s interior was conducted
- Disclosure of whether the REALTOR® has any conflicts of interest.
Don’t Forget About TREC Rules
Texas law says a real estate license holder is obligated to provide a broker price opinion or comparative market analysis when negotiating a listing or offering to purchase the property for the license holder’s own account as a result of contact made while acting as a real estate agent. In addition, the license holder must also provide whoever requested a BPO, CMA, or estimated worth or sale price with the following written statement, reproduced verbatim and in at least 12-point type:
“This represents an estimated sale price for this property. It is not the same as the opinion of value in an appraisal developed by a licensed appraiser under the Uniform Standards of Professional Appraisal Practice.”
MLSs and RPR should provide the disclaimer when analyses are created through these platforms.
For more information about TREC rules, read the blog post “TREC Adopts Changes to Rules for Consumer Notices, BPOs and CMAs, and More” from November 2017.
Just one more reason why a Listing Agent should think twice about even talking to a Buyer Prospect. AND If a Listing Agent is also a principal in the Property Ownership then the Listing Agent should not even think twice but should “run away” from a Buyer Prospect! Just my opinion.
I couldn’t agree with you more. When it occurs, I tell them upfront I cannot provide price or opinion and they are much better off with their own buyer agent. Because of this directness, I’ve had them choose to find another property and work with me rather than find another agent.
My understanding of a Broker Price Opinion is that it is done by a licensed Real Estate Broker.
That may only apply when they are needed as evidence in a Court action such as Probate or possibly Divorce.
I only do BPOs for banks and occasionally a private party. My dilema is that federal law requires regulated banks to obtain an opinion of value and may not rely on evaluations which provide a suggested list or expected list price. TREC says a BPO can NOT offer an opinion of value. NAR’s Code of Ethics talks about providing a” defined value or price” or “when REALTORS prepare opinions of real property value or price.” NAR seems to think it’s OK for a REALTOR to provide an opinion of value and the banks REQUIRE an opinion of value. Their most… Read more »
Only licensed real estate appraiser scan use the word “value”.