Make sure you’re not violating the REALTOR® Code of Ethics when creating broker price opinions and comparative market analyses. Standard of Practice 11-1 says that when REALTORS® prepare these types of opinions, they must:
- Be knowledgeable about the type of property being valued
- Have access to the information and resources necessary to formulate an accurate opinion
- Be familiar with the area where the subject property is located
Unless a lack of any of these is disclosed to the party requesting the opinion in advance.
If you aren’t pursuing a listing or assisting a buyer with a purchase offer, you must include the following information, unless the party who requests the opinion requires different information.
- Identification of the subject property
- Date prepared
- Defined value or price
- Limiting conditions, including statements of purpose(s) and intended user(s)
- Any present or contemplated interest, including the possibility of representing the seller/landlord or buyers/tenants
- Basis for the opinion, including applicable market data
- If the opinion is not an appraisal, a statement to that effect
- Disclosure of whether and when a physical inspection of the property’s
exterior was conducted
- Disclosure of whether and when a physical inspection of the property’s interior was conducted
- Disclosure of whether the REALTOR® has any conflicts of interest.
Don’t Forget About TREC Rules
Texas law says a real estate license holder is obligated to provide a broker price opinion or comparative market analysis when negotiating a listing or offering to purchase the property for the license holder’s own account as a result of contact made while acting as a real estate agent. In addition, the license holder must also provide whoever requested a BPO, CMA, or estimated worth or sale price with the following written statement, reproduced verbatim and in at least 12-point type:
“This represents an estimated sale price for this property. It is not the same as the opinion of value in an appraisal developed by a licensed appraiser under the Uniform Standards of Professional Appraisal Practice.”
MLSs and RPR should provide the disclaimer when analyses are created through these platforms.
For more information about TREC rules, read the blog post “TREC Adopts Changes to Rules for Consumer Notices, BPOs and CMAs, and More” from November 2017.