A good reminder to North Carolina Agents who do BPO’s for banks

This year’s Mandatory Update as required by the NC Real Estate Commission as part of your annual Continuing Education requirement has a few interesting reminders to us all.  I recently taught this update class for the first time since it became available in September. 

The information is a great refresher to things we SHOULD already know, however, I suspect there will be a few agents making some changes after they take this class.  For some it’s been a really long time since they took their Pre-Licensing and it’s easy to forget the things we don’t commonly practice.  

It starts with the NC Appraisers Act which specifically defines an appraisal as “…an analysis, opinion or conclusion as to the value of identified real estate or specified interests therein performed for compensation or other valuable consideration.”  Pretty technical, right? 

The law also defines a comparative market analysis (CMA) as “…the analysis of sales of similar recently sold properties in order to derive an indication of the probable sales price of a particular property by a licensed real estate broker.”  Notice they refer to the outcome of the analysis as “probable sales price” and not “market value.”  More on that point in a minute.

Well, the NC Appraiser Act gave licensed brokers a specific exemption from their rules and regs so we could do this analysis as a regular part of our business and not have to rely on an appraiser every time we listed a home.  The rule states we can perform a CMA “only when it’s performed by a licensed real estate broker for a prospective or actual brokerage client or when it involves real property in an employee relocation program.”  So we’re in the clear! 

UNTIL…(dom, dom, dom)…we receive a fee for doing a BPO (Broker Price Opinion) and we know we aren’t getting that listing, or even worse, it’s already listed!  If you have no reasonable expectation of getting THAT listing for which you’re doing the analysis from the bank or any other entity, you cannot do a BPO for a fee.  Do them all day long for free if you choose, otherwise you could be in violation of the law.

Agents BEWARE…if you get a call from a bank to do a BPO on a home that is already listed, turn it down or prepare to do it for free!  This is a routine activity especially in a short sale when an offer is received, banks will often get a third party analysis.  In an effort to avoid the cost of an appraisal, they call agents looking for help.  Be careful…that $75 fee you received could cost you a lot more in the end!

Last note…when you do perform an analysis within the scope of the Act, be sure you reference your final value as PROBABLE SALES PRICE and NOT as MARKET VALUE.  The term “market value” is reserved only for qualified appraisals.