Bet you didn't know this? Dumbfounded today, after getting word that the bpo on one of my listings came back 50k over the list price, I decided to do a little research. I had the feeling that this was the case, but needed to confirm it.
After speaking with a few attorneys, and they in turn having conversations with various local boards of Realtors, it is in fact illegal for agents to perform a bpo, in the state of CT, when it comes to determining value of a short sale.
Directly from the current CE cycle Law update, which was developed at the request of the Real Estate Commission by The Center of Real Estate and Urban Economic Studies, University of Connecticut.
The content of the entire update, is here
Here are the key, relavent points in this CE class, taken from the Instructor notes:
The Real Estate Commission has identified four current topics that seem confusing to agents, and would like instructors to provide clarification so that agents do not find themselves in violation of Connecticut licensing laws.
The first current problematic topic is Broker Price Opinions. The law related to Broker Price Opinions can be found in the Appraisal Licensing Law. Connecticut General Statute Section 20-501 requires that persons engaging in the real estate appraisal business be licensed. Section 20-500(5) defines "engaging in the real estate appraisal business" as "the act or process of estimating the value of real estate for a fee or other valuable consideration." Section 20-526 provides for exceptions.
The Department of Consumer Protection is actively pursuing claims against real estate licensees that are illegally conducting broker price opinions.DCP staff shared the following true story about an open investigation. A complaint was filed against a real estate salesperson who was being paid by a financial institution for providing BPOs.As part of the DCP investigation, the salesperson stated that the financial institution approached her to do a BPO on a property that financial institution was holding the mortgage on and had been actively listed on the MLS by the seller with another broker. A purchase offer had been received and the bank wanted verification of the home’s value before agreeing to the short sale for this buyer. The BPO salesperson called the listing broker to make an appointment to view the property. She performed the BPO and the listing broker complained to DCP for two reasons: illegal BPO and interference in a client relationship.
When called to Hartford for a compliance meeting, the BPO salesperson stated that she was in pursuit of a listing. She was told by DCP legal staff that it is not possible to be pursuing a listing when the property is already listed and the reason for the BPO is to determine value for a purchase offer. This is still an open investigation.
Remind students of CT law – don’t fall into the BPO trap! If real estate agents are not licensed appraisers, they can’t charge a fee for conducting a market analysis unless they are in pursuit of a listing or buyer agency agreement, or they represent a buyer or seller!
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You must be a licensed real estate appraiser to value properties for a fee.
Only exception : When valuing property for an existing client or when valuing property for a prospective client, in pursuit of a listing or agency agreement. The fee must be paid back to the consumer if you list and sell the property.
Licensees can not charge fees to lenders, for properties that are currently listed with other brokers.
Well there you have it..... guess I have some more phone calls to make in the morning.....
Patrick
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