Broker Price Opinions (BPOs) are used by brokers/salesmen as a service to their clients or potential clients to determine a competitive listing price on a property. Recently banks and other lenders have been seeking brokers to provide BPO's on Real Estate Owned (REO) properties, that is, properties the bank or lender has acquired through foreclosure sale or deed in lieu of foreclosure.
Therefore, if the BPO is done for the listing or sale of real property through that brokerage, that BPO is proper. However, it may be interpreted as a violation of statute if the BPO is performed and the brokerage does not list or sell the property.
The RED is also going to make a distinction between a BPO that provides a "listing" price, versus one that purports to provide a "value" of the property. A fine line to be sure, but one that is an important conceptual distinction in the real estate industry, and now especially, to the Real Estate Division.
What does this mean to you?
- Have a written office policy regarding BPOs; be sure your broker allows this type of business to be performed.
- If you are a licensee accepting REOs from a lender for the purpose of performing BPOs you should no longer perform the BPOs for any properties you will not be listing
- Always be sure that the BPO is the opinion of a LISTING price.
- State in writing to the lender that you anticipate getting the listing for the property on which you performed the BPO, but that the lender is under no obligation to grant you the listing
- Be wary of performing BPOs, even for no compensation.
As always, talk to your broker. Know what you are doing. Act within the area of your expertise.
Call NVAR's Legal Information Line if you have questions. (800) 748-6999.
Hey Arina,
Great information, and something to keep in mind.