Are BPOs Legal in Your State?
Broker Price Opinions (BPOs).
Many of us have done them.
But a word to the wise... in some states, such as Delaware, they are illegal if the property is listed and/or if the property is under contract.
And it doesn't matter if you call them a CMA either. If, as a REALTOR in Delaware, you're giving a valuation of a property that's listed, you're going behind the sign, and that's illegal. If the bank wants to determine the value of the property, for whatever reason, and the property is already listed, in Delaware the only person they can hire to determine the value is an appraiser.
So where does that leave us as listing agents?
I got a phone call on Friday from one of the lenders behind one of my Seller's short sales (the property is listed and under contract) requesting access for an agent to perform a BPO. Do I allow the agent access, which is illegal, but make him/her fully aware of the contract price, or do I remind them of the law and not allow access?
This is one that I've asked to have escalated, so what to do?
I denied access, informing the REALTOR that it's illegal for him/her to perform BPOs on listed/contracted properties in Delaware.
The REALTOR's response?
But the bank ordered it!
My response?
The bank can't give you permission to break the law.
Yes, I called his/her Broker, but I also called the bank to ask if they're aware of the law in Delaware.
If you're not aware of your state's status, check with your Broker or with your state Association. The list on the link that follows was good as of sometime in 2011, but laws change. http://www.appraisalinstitute.org/newsadvocacy/downloads/BPOStateLaws.pdf
When can you perform a BPO or CMA? When you're giving a valuation of the property for the purposes of potentially listing the property... but not when it's already listed.
I got another phone call on Friday about another property from a REALTOR who was assigned the task of interior photos for the lender behind my listing (yes, it's under contract). I asked if it was a BPO or CMA, and they said no. They were just assigned the task of taking interior photos.
In the end, I'm not sure where it leaves us as REALTORS in terms of the ultimate effect on our transactions. I don't trust automated valuations, desktop valuations, Trulia, or Zillow; REALTORS aren't allowed to do the BPOs; even when they've done them in the past, many of them only did BPOs and weren't working in the field to know enough to accurately assess value; some REALTORS who were doing BPOs were rumored to be over-valuing properties so the transaction would fail and they'd get the emerging listing; and will banks actually cough up the extra money to pay for an appraisal by an appraiser who's local and knows the market?
A possible solution? Have the Seller's lender conditionally approve the short sale pending a review of the Buyer's appraisal of the property.
Your thoughts?
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