Posts tagged Broker Price Opinion
Legislation that would clarify several aspects of an Illinois law governing broker price opinions and comparative market analysis has passed the state legislature and currently is under consideration by Gov. Pat Quinn, the Appraisal Institute reported July 23.
SB 3044 adds definitions of both BPOs and CMAs to the state’s Real Estate Appraiser Licensing Act and its Real Estate Licensing Act, and clarifies when and how BPOs and CMAs may be performed by brokers and managing brokers.
The bill was sent to Quinn June 27, and he has 60 days to take action.
According to the Illinois Coalition of Appraisal Professionals, “Defining and regulating these products will protect the public’s trust and reduce consumer confusion.” The bill was supported by ICAP after (more…)
With an influx of alternative valuation products now being offered to appraisers, I am often asked which of these assignments can be done by appraisers and which should be avoided. I am not a USPAP instructor, a lawyer, or a specialist in your individual state’s law, but I will give you the answer as I understand it (I am not responsible for your individual compliance to USPAP, the law, and blah blah blah).
First, an analogy is in order. Imagine you are a spectator at a sporting event. Sitting next to you is your buddy who asks you about a certain call the referee just made. Though you might offer him your version of what happened, nobody would give much credence to what you say because you are not an expert. It is just your opinion. As you are walking from the stadium, the lady in front of you suddenly grips her left arm and falls to the ground. Immediately, you spring to action, diagnose her with a heart attack, and begin treating her. Though all the signs are there, would anyone believe your diagnosis beyond a simple layman’s estimation? Probably not.
Let’s take the same scenario however, with a slight change. What if you prefaced your comments about the game by saying, “In my 20 years as a professional (more…)
It is all-too-rare that we hear positive news regarding the appraisal profession. There is an awful lot of complaining that goes on, most of it justifiable, but little good news that gets shared. Part of the problem is that there is no central source for information regarding our profession which appraisers might utilize in order to find out what is going on across the country and affecting our profession, and could be used to enhance our industry and our citizens in our own state.
From what I have seen, most of any good news is being generated on a state basis. Every small victory in one state can be viewed as a seedling for development and further improvement in 49 other states, most especially including our own great state of New York.
I thought it might be a good idea to share some good news, and perhaps others can add to the list. Please feel free to comment below with any other good news you wish to share or comment. And keep in mind, these tidbits are only based on information I have come across. Who knows how much other good news there is, which I am unaware of.
Alphabetically by state:
Buyer Beware! Where is the Value? (PART 1)
In the years of 2007/2008, the ideologue of, “Appraiser Independence” had become popular for the real estate market’s economic agents and the processes it relies on to function properly. The idea gained respect, due to the perseverance of Real Estate Appraisers carrying out their Independence, during the decade of 2000-2010.
The Home Valuation Code of Conduct (HVCC) was introduced according to prevailing design and initiative: the advancement of a market in need for an inspired and renewed sense of competition and freedom, but with sensible regulation to assist in reducing adverse affects of pure unattainable greed, to allow economies the ability to evolve and/or progress.
In retrospect, Fannie Mae and Freddie Mac—these secondary financial power houses, were placed into the center of attention with a well deserved, controversial lawsuit—instead, a decade worth of accomplishments were somehow mismanaged and/or changed, thwarting a sincere Independent (more…)
In a recent Mortgage New Daily article, Brian Coester with Coester VMS writes, “I completely disagree with the article not just based on owning an AMC, but on the basis of being an appraiser and being on both sides of the table. The reality is that appraisals are more accurate than they’ve ever been.” He even repeats himself, “in the short term there will be issues to work out, however appraisals are better than they’ve ever been.”
Next, he talks about the lack of quality in the appraisal industry. So, appraisals may be better than they’ve ever been, but there is still a huge lack of quality; at least according to Brian. Let’s look at his logic.
“The reason for the appearance of lack of quality, is now we have the ability to check appraisals against relevant data like an AVM, Automated scoring, UCDP and variety of other tools that weren’t available before.”
Stop the presses! So, now we can check to see if appraisals are accurate by checking them against Automated Valuation Services? (more…)
Legislation that would have significantly expanded the ability of New Jersey real estate brokers and salespersons to offer broker price opinion services did not become law because of a Jan. 21 “pocket veto” by Gov. Chris Christie. This is the second time Christie has vetoed BPO legislation.
The legislation (S. 3058) was passed by both houses of the New Jersey legislature Jan. 6, and was presented to Christie for his consideration. However, because the bill was passed by the legislature during the last 10 days of the 2012-13 legislative session (which ended Jan. 14), the governor only had seven days in which to sign or veto the bill or it would fail to become law. Christie did not sign the bill nor return it to the legislature with an absolute or conditional veto. Therefore, the legislation failed to become law when the seven-day consideration period ended Jan. 21.
This is the second time during the 2012-13 legislative session that Christie has vetoed BPO legislation. Similar BPO legislation was vetoed by the governor Aug. 19, 2013. In his veto message at that time, Christie noted his concerns about “consumer confusion,” and the impact on “sellers struggling to determine when and why to use (more…)
On December 2, 2013, three law firms in Florida, Washington and Colorado teamed together to file a class action complaint on behalf of real estate agents and others allegedly owed unpaid fees for broker price opinions ordered by BrokerPriceOpinion.com. The complaint also names three-related companies First Valuation, LLC, First Valuation Services, LLC, and First Valuation Technology, LLC as defendants on the basis that they are “alter egos” of BrokerPriceOpinion.com and do not have true corporate separateness in their operation. The lawsuit was filed in federal court in Colorado, where the defendants are based.
The named plaintiff in the lawsuit is Kathy Wornicki, a Florida real estate agent, who alleges that she is owed $880 for 29 (more…)
The Appraisal Foundation has drafted a white paper on Alternative Valuation Products and the Uniform Standards of Professional Appraisal Practice (USPAP).
The white paper is intended to provide information to assist appraisers, users of appraisal services, and others, with a greater understanding of Alternative Valuation Products and their use in the marketplace. The paper also attempts to view these products in light of an appraiser’s USPAP obligations.
All interested parties are encouraged to comment in writing before the deadline of December 31, 2013. Send comments to tafcomments AT appraisalfoundation.org.
In the appraisal industry, particularly the residential mortgage sector, there has been a proliferation of products and processes attempting to provide alternatives to “traditional” appraisals in recent years. The primary factors behind development of these Alternative Valuation Products (AVPs) are generally to reduce cost and improve timeliness. (more…)
On Aug. 19, New Jersey Gov. Chris Christie vetoed bill S. 2551, legislation that would have significantly expanded the ability of the state’s real estate professionals to provide broker price opinion and comparative market analysis services.
In his veto message to the Legislature, Christie said,
“While I appreciate the desire to facilitate additional business for real estate licensees in the state of New Jersey, I am concerned about potential consumer confusion.”
The purpose of USPAP is to promote and maintain a high level of public trust in establishing requirements for appraisals and “reliable” valuations.
The problems is, however, that it is subjective. Assuming one can support the conclusion or opinion; beauty is in the eye of the beholder, or in this case, the appraiser. Likewise, evaluation and selection is in the eye of the appraiser – which is why two different and reasonable and competent appraisers can reach two different, but equally credible opinions, on the same property.
And that is the problem I have with USPAP or its compliance and attempts to regulate “good taste” or “attractiveness” in the guise of using “appropriate” comps while avoiding one‘s biases or pre-judgment and experience.
USPAP is used both as a shield and (more…)
APPRAISAL: (noun) the act or process of developing an opinion of value; an opinion of value.
(adjective) of or pertaining to appraising and related functions such as appraisal practice or appraisal services.
Comment: An appraisal must be numerically expressed as a specific amount, as a range of numbers, or as a relationship (e.g., not more than, not less than) to a previous value opinion or numerical benchmark (e.g., assessed value, collateral value).
In general terms the USPAP definition is elegant in its simplicity.
We all understand what it is that appraisers provide. You provide opinions of value. Call it whatever you want, but an opinion of value is an appraisal.
What about BPO’s or CMA’s?
Aren’t they really appraisals dressed up as…something else? (more…)
North Carolina Governor Beverly Purdue signed S.B. 521 into law July 12, and the legislation will significantly expand the ability of the state’s licensed real estate brokers to offer a broker price opinion or comparative market analysis.
The legislation included two amendments provided by the state’s appraisal organizations.
Prior to the new legislation, North Carolina real estate brokers were limited to providing a CMA only in the real estate sales context, and they had to have a reasonable expectation that a listing would result from the performance of the CMA.
Under the new law, brokers (other than provisional brokers) (more…)
Over the last year, there has been a tremendous increase in the use of broker’s price opinions (a.k.a. comparative market analysis, broker’s estimate of value, etc.) that are being performed by real estate brokers and salespeople, in lieu of appraisals. While BPOs were previously used for very limited purposes, they are now being used as valuation products in the finance arena, primarily for the review of distressed properties prior to short sales or foreclosure. They are also being used in areas previously unimagined several years ago, including segments of the commercial market.
The increase in the use of BPOs for these purposes is largely a result in the downturn in the real estate market, and a reduction in the commissions being earned by (more…)