The Answer: It depends!

Performing a Broker Price Opinion (BPO) is subject to both the law and the Code of Ethics. The NC Real Estate Commission states:

Commission has noted an increasing number of reports of brokers providing, for a fee, a “broker price opinion” (BPO) for a party who is not a client or potential client of the broker. 
The downturn in the real estate market has apparently resulted in more demand for informal estimates of the most probable sale/purchase prices for properties that are less expensive than a full appraisal. 

Brokers may be requested by lenders, loan servicers, potential investors or others to provide this service for a fee, or brokers may simply be seeking alternative sources of income in a slow market.

Brokers should remember that the North Carolina Appraiser Act requires any analysis, opinion or conclusion as to the value of real estate performed for compensation to be performed by a licensed or certified appraiser. 

However, the statute does provide a limited exception to this requirement that permits real estate brokers to perform a “comparative market analysis” for compensation ONLY for prospective or actual brokerage clients or for real property involved in an employee relocation program. 

A “comparative market analysis” (CMA) is defined 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.”

A “broker price opinion” (BPO) that is based on recent sales of comparable properties is, therefore, a CMA, and may be performed for a fee only as noted above.

The Real Estate Commission considers the performance by a broker of a BPO for compensation in violation of the Appraiser Act to also constitute a violation of the Real Estate License Law.

Practice Tip
When performing a comparative market analysis or broker price opinion for a client or potential client, be sure to:
     • Document your relationship with the client or prospective client.
     • Document the recent sales of comparable properties upon which you base your analysis.
     • Identify the results of your analysis as a “probable sales price” only and not as the
     “market value” or an “appraisal”.

If you decide to pursue a Competitive Market Analysis for a fee, please remember your ethical obligation under Article 1, as interpreted by, Standard of Practice 11-1:
When REALTORS® prepare opinions of real property value or price, other than in pursuit of a listing or to assist a potential purchaser in formulating a purchase offer, such opinions shall include the following unless the party requesting the opinion requires a specific type of report or different data set:
     1) identification of the subject property
     2) date prepared
     3) defined value or price
     4) limiting conditions, including statements of purpose(s) and intended user(s)
     5) any present or contemplated interest, including the possibility of representing the
     seller/landlord or buyers/ tenants
     6) basis for the opinion, including applicable market data
     7) if the opinion is not an appraisal, a statement to that effect (Amended 1/10)

By Will Martin 

I am frequently asked by REALTORS® whether they are required to disclose the existence of some past event that had an adverse effect on a property.  I give my customary “it depends” answer because the answer depends—as it always does—on the particular facts. 

Take the following example: you’ve just gotten a new listing on a house and you’re sitting at the seller’s dining room table assisting her in completing the Property Disclosure Statement.  The seller relates that one Saturday evening a couple of years ago, water began dripping from the dining room chandelier just before the arrival of dinner guests.  The dinner party was adjourned to the living room and was a screaming success, but a post-party investigation revealed a slow leak in an upstairs bathroom tub/shower just above the dining room that had caused a significant amount of unseen damage.  Lots of damp wood and mold under the tub in the space above the dining room ceiling.  (The hair on your neck stands up when the seller mentions “mold.”)  The leak was fixed, the mold removed and a fair amount of sub flooring and sheetrock replaced.  (You steal a glance at the dining room ceiling as the seller is talking and it looks perfect.) The seller tells you that she has documents from a reputable contractor that detail all the work that was done.  You are thinking to yourself: Do I have to disclose any of this to a prospective buyer?

As you know, you are required by the licensing law and the REALTOR® Code of Ethics to disclose material facts about a property.  So are the facts that the seller has told you about in the above example material facts?  In my opinion, if an agent can, under the particular circumstances with which he/she is confronted, reasonably conclude that: (1) the source of a problem has been identified and satisfactorily corrected/repaired and (2) any damage caused by the problem has been satisfactorily repaired, then the agent would not be required to disclosure any facts about the problem and the damage caused by that problem because the information is no longer material.  In the example given, I would recommend that you, as the listing agent, request copies of the documentation from the contractor.  If the documents support what the seller has told you, and based on your own inspection of the property there are no indications that the problem still exists, I do not believe you would be required to disclose what the seller has told you about the leak or the problems it caused to prospective buyers.  On the other hand, if the seller didn’t have reasonable documentation from the contractor and you were unable to reasonably satisfy yourself in some other way that the leak and the resulting damage had been taken care of (by perhaps contacting the contractor who did the work or getting a supporting opinion from another qualified person), then you would probably be required to disclose.

Even if disclosure isn’t required, I recommend that agents have a discussion with their seller clients about the potential benefit of disclosing anyway.  Buyers who discover the existence of a previous problem after closing sometimes threaten or even take action against the listing firm and/or the seller based on an alleged “cover-up” of the problem.  Disclosing the problem up front and demonstrating that everything has been fixed should help avoid that possibility.

Will Martin is a manager in the law firm of Martin & Gifford, PLLC, which practices primarily in the area of real estate brokerage law.  For more information about the firm, go to www.martingiffordlaw.com.  Copyright © 2009, Martin & Gifford, PLLC.

• Develop a maintenance schedule when installing a brochure box.
• Provide Sellers with other broker’s comments and changes in the market on a regular basis. Honest critiques should be welcomed and may improve your client’s chances of selling their properties.
• Inform the seller of anything that may hinder the sale of a home.

• When making an appointment, follow the showing instructions stated in the MLS. Use the appointment-center phone number instead of calling the broker, especially when it is late at night. The appointment center will have the most up-to-date schedule about property showings. Sellers should not be unnecessarily inconvenienced, especially when you know the prospective buyers have not yet decided to move to the area.
• If a buyer refuses to enter a house when you have made an appointment, explain that courtesy demands that a broker stop by the house and leave a business card or call the appointment-center.
• Remember that having a home on the market may not always be an enjoyable experience; therefore, please extend every courtesy and consideration to each seller.
• Schedule appointments realistically. Schedule adequate time to show the property and drive to the next one. Call the listing company or appointment-center about any delays or cancellations.