The Appraisal Institute has increased its stance against broker price opinions by informing several state appraiser board chairs of the possibility of illegal BPOs being performed in their states. In a joint letter, the Appraisal Institute, American Society of Appraisers, American Society of Farm Managers and Rural Appraisers, and the National Association of Independent Fee Appraisers informed appraiser board chairs in 23 states across the country about the possibility that real estate brokers and sales associates in their states may be performing BPOs illegally for the purposes of loan modifications, workouts and foreclosures.
While outlining how BPOs may negatively affect real estate values, the appraisal organizations urged state appraiser boards to review state laws regarding the performance of BPOs and to issue written guidance that reiterates the purposes for which BPOs may and may not be performed. The letter also encourages state appraiser boards to bring this issue to the attention of the agency or board responsible for licensing and regulating real estate agents and brokers, so that they may investigate and take appropriate enforcement action against agents and brokers that perform illegal BPOs.
In as many as 23 states, it is illegal for a real estate broker or sales associate to perform a BPO for any purpose other than a real estate listing, according to Bill Garber, Appraisal Institute’s Director of Government and External Relations. A principal reason that many states have severely restricted the purposes for which a BPO may be performed relates to the fact that they are largely unregulated and are performed with little oversight and training. Unlike licensed and certified appraisers, BPO preparers have virtually no valuation-specific education, training or testing requirements, and do not adhere to generally accepted valuation standards, Garber explained. As a result, BPO value estimates vary widely and are far less reliable than professionally prepared real estate appraisals.
To view the joint letter in its entirety, visit www.appraisalinstitute.org/newsadvocacy