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Ethics

No More BPOs For You! (How You Could be Violating RELRA)

Take a moment:

housesIf you are a Realtor (especially in Pennsylvania) who has been performing BPOS (Broker Price Opinions) for lenders, you might want to stop and take a moment to read this.

Perform a BPO and you may be violating the Real Estate Licensing and Registration Act (RELRA) and the Real Estate Appraisers Certification Act, and could be prosecuted by the Real Estate Commission or the State Board of Certified Appraisers or both.

If you are reading this saying, what????? You are not alone. There are many Brokers and Realtors scratching their heads saying the same thing.

The harsh reality

But, the harsh reality is that simply put, the only people who are allowed to perform BPOs are certified appraisers.

Brokers and Realtors can only perform CMAs (Comparative Market Analysis.) And, get this, unless you are either representing the lender or trying to obtain the listing, you can’t even perform the CMA. So for instance, if you have no chance of getting the listing and the lender just wants a BPO, say goodnight Gracie. No BPO or CMA for you or the lender.

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However, if the lender states that whoever does the BPO or in your case, the CMA gets the listing, you should get that in writing along with any fees that the Broker charges for the CMA. You must also include the limiting language in your CMA exactly how it is published in RELRA and must be on the first page of the CMA.

Completely oblivious

I find that most lenders do not want a CMA, they want BPOs and are not aware of the various state laws or rules.

For those Brokers/Realtors who are currently performing BPOs or those who have been performing BPOs to get extra income, those days are over and they should be grateful they have not yet been caught thus far.

There’s no patch to help those who need to quit performing BPOs over a period-of-time. You have to quit cold turkey and if I were you, I’d do it today.

If you are not certain of your state’s laws, you should check with local counsel or your Real Estate Commission.

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Written By

Writer for Agent Genius Magazine. Renee's primary focus has always been on changing and improving the real estate industry through her words and her "big mouth." She is not afraid of a little controversy or ruffling a few feathers every now and again and is always up for a good debate. Renee prides herself on being different and is definitely not your Mary Jane, beige, tweed skirt suit, knee high wearing mother's Realtor. Renee is best known for her humor, sarcasm, her keen wit and is a social media junkie who can usually be found tweeting at odd hours of the evening. Check Renee out on her popular website www.reneeporsia.com

29 Comments

29 Comments

  1. Fred Romano

    February 16, 2010 at 1:00 pm

    Wowie! Thats sucks for PA agents. BPO’s really suck anyway, but I guess there are agents out there that make money doing this. – Cold turkey is good with mayo 🙂

    • Renee Porsia

      February 16, 2010 at 1:17 pm

      I’m sure the Real Estate Commission could have a ball finding all the Realtors who are doing them. I’m not a cold turkey and mayo gal… I prefer ham & cheese with mayo! YUM!

  2. John Ringgold

    February 16, 2010 at 1:19 pm

    In Kansas real estate agents are still allowed to do BPO’s, but with the changes we have found that BPO’s are now a act that can only be performed by a licensed agent. This puts more burden on the Broker because if it is a stated as a function of a licensee, the Broker is responsible. Per our Real Estate Commission the Broker now has to assign a transaction number to the BPO and keep a file. We are affiliated with a franchise that requires a % of every transaction so now the franchise is getting a % of every BPO. If the office takes a small fee for paperwork processing, there really isn’t much left for the REALTOR(r) that did all the work.

  3. ktcoz

    February 16, 2010 at 1:23 pm

    This article really should be more clear. RELRA pertains strictly to PA. There are many states that agents & brokers can be paid for BPOs.

    • Renee Porsia

      February 16, 2010 at 10:49 pm

      I think my article was pretty clear in that the first sentence states if you are a Realtor especially in PA.

  4. Ken Montville

    February 16, 2010 at 1:28 pm

    Sounds like a mission for PA RPAC. I don’t think Realtors who are doing BPOs for the little extra money it brings in are going to stop until they get the nasty-gram in the mail. There is just too much of it going on and let’s call a spade a spade, this is one way for Realtors to make a buck in hard times.

    I don’t do BPOs myself. Never have, probably never will. I know puh-lenty of reputable Realtors that do, though. Pin money. Mad money. Grocery money. Whatever you want to call it, it’s a nice little add on.

    This is just another example of some nit picky nook in the legal system that needs a good lobbyist to go down to the Harrisburg to get it all straightened out. Appraisers have plenty on their plate.

  5. Ross Therrien, Prudential Verani

    February 16, 2010 at 3:24 pm

    Haven’t done a BPO or CMA for anyone but the homeowner in years so I’ll have to check with NH’s laws. I know ALOT of agents that do that would be concerned. Thanks for the post.

  6. Mark Hanna

    February 17, 2010 at 8:37 am

    Renee, I’ve been saying what you wrote for years to my PA colleagues, some listen, some don’t. The turkeys will be those who don’t heed this important advice. Thanks for the post.

  7. Gia Freer

    February 17, 2010 at 10:19 am

    Hi all…just an update from Florida (and the FAR legal hotline which I called after I read this article 🙂 ) – As BPO’s are part of regular real estate activities here in Florida, only licensees (licensed agents and brokers) are allowed to perform them (so long as they are NOT called appraisals) and they must be done under their Broker. In other words, the licensee cannot do them for the lender and get paid directly from the lender (same as a commission). Hope that helps for any Florida agents doing Broker Price Opinions.

  8. Sus

    February 17, 2010 at 2:48 pm

    Be aware that many of the Asset Management Companies…Use the BPO’s as their “Guide” for value. (exterior drive by/BPO – yes the house is there….seldom an Interior inspection of the property).
    They then have a “licensed Appraiser” do a “review/reconcillation” for a supplemental value verication….(not a typical at site interior appraisal inspection), these Appraisers/Review/Reconcillation …typically ARE not from the Market or the same State & have limited access to “Real Market Data”.
    The BP/Reconcillation is just another cheap way to get “value” from RE Agents & Appraisers , while putting the RE Agents & Appraisers license/E/O insurance on the line……

  9. Cindy

    February 18, 2010 at 10:40 am

    This applies to North Carolina also.

  10. Alice Keife

    February 20, 2010 at 6:58 pm

    This applies to West Virginia as well.

  11. Ron

    May 18, 2010 at 3:31 pm

    Great article, unfortunately some people will continue to skirt the law thinking that they will not be the one who gets caught because the real estate or appraisal board already has toooooo many things to keep track of to pay attention to little old them. Lollol…illegal activity can blow up in your face any number of ways, especially in this environment, bankruptcys, foreclosures, whistles blowers, loan audits, valuations audits and even the company you do the BPO for, especially if they get in hot water and need scapegoat. So check your state law and adhere to it. The small BPO fee is not worth your license and all of the expense you will encounter when you get caught in violation of your state law.

  12. Katherine Scheri

    September 15, 2011 at 2:04 pm

    I know that this is an older article however, the entire premise is not accurate. Certified Appraisers ARE NOT PERMITTED to complete BPOs or CMAs as they do not comply with USPAP. It is an ABSOLUTE violation of our licensing standards The only professionals that should be completing BPOs or CMAs are brokers. Lenders are not permitted to use them for lending decisions – they are permitted as a secondary instrument but for lending, Fannie, Freddie et al will only accept an appraisail with a loan origination. Most of the new regulations do not apply to REO and internal-use appraisal products. The bottom line is that BPOs and CMAs do not employ the uniform standards that appraisers are required to employ and therefore, appraisers are not permitted to use them as valuation tools. That is not to say that in this economy, many appraisers have opted to add this product to their lineup because they need to supplement their dwindling appraisal income. They are doing so in violation of their licensing and USPAP.

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