State Law Regarding the Use of BPO’s

The Appraisal Institute has released a document listing the applicable laws regarding Broker Price Opinions. The list covers every state and breaks the states into three general categories: Unlimited Authority, Limited Authority and Broad Authority.

Here is a link to the list:

Download file

  1. I don’t think Realtors should be allowed to do BPO’s for banks. As a real estate appraiser and a Realtor, I believe a Real Estate Agent is not qualified to do a brokers price opinion and a lender should not rely on such as a method of pricing a property for sale. An certified residential appraiser should only be involved. We need to solve the problem we have now with the housing market, not make it worse. The banks are trying to avoid paying appraisers prices by creating these BPO’s that saves them maybe $200.00 per deal by not ordering an appraisal and what they don’t understand that sometimes they are loosing thousands of dollars instead.

  2. Aloha Kalikimaka from Hawaii! I would like to ask – why is it prohibited in some states for a realtor to charge a service fee for a BPO? Why would I be limited from being a consultant in my chosen profession – wearing many other hats relative to real estate? Thanks for any clarity~ Aloha~

  3. Charita Cadenhead

    I would be interested in knowing (1) the effective date of this rule for Alabama licensees (2) if the prohibition of real estate licensees performing BPOs was a measure encouraged by Alabama appraisers. (3)I would also be interested in knowing if NAR or AAR is taking steps so that licensees will be allowed to perform BPO.

  4. Bill A

    Since most of what the gov’t thinks and prints is in double speak, does this or does this not mean that BPO’s will continue or not continue to take assignments from appraisers?

  5. Sam Martin

    Thanks for this valuable link.

  6. Melvin L Pollock

    It seems to me that part of the reason that we are in this incredible mess is that in too many cases, mortgage brokers and banks utilized appraisers that were not always fully qualified, but under the control of the mortage broker, and/or bank. Unless a Qualified Professional appraiser (MAI)who will do a complete, certiifed and documented report is utilized, the system is still vulnerable. And of course, a Real Appraisal will cost money, real money, and everyone is trying to reduce costs. On the other hand, a BPO is only an opinion, and supposedly an Opinion of one who is qualified in the local housing market, has considerable experience in the Industry in that particular area; and can discern between properties that are similar on paper, but different in fact; those that SELL,and those that linger on the market.

  7. Beth Johnston

    I have done BPO’s for years for Banks, Attorneys in divorce cases and I have had appraisers call me for help. I am a licensed Texas REALTOR in Texas. It should be the choice of who wants an appraiser or by a seasoned experienced REALTOR.

  8. Bill A

    Just a word to the writer who thinks only an MAI can perform a complete, certiifed and documented report. I have personally met and know MAI’s and SRA’s who are just as unethical in the performance of their work as some appraiser’s who don’t have the nice shiny titles. It’s nice to have a title and all but so did the bank presidents, VP’s, Stock brokers and the title holders of freddie and fannie. Many people hide behind titles and are full of corruption. Integrity and honesty is not taught and only comes from within a person. Either you have it or you don’t, title or not.


    Serious problems with the appraisal system within the State of Indiana. I am sure you are aware of all the problems in real estate in Indiana and all over the United States; including the “sub-prime” melt down; the high foreclosure rates; declining values and the epidemic of bank and mortgage company fraud. All of this comes at a time when our property taxes have increased dramatically. All of these assaults on home ownership and property values are of great concern to me and many of my peers.
    The issue I need help with is the proliferation of unqualified real estate appraisers in our state caused by the lack of updating of the state laws about appraisers. Currently, we have two classes of appraisers in our state. They are;
    1. Indiana State Certified Residential and Certified General Appraisers. The current requirements and qualifications (as of 2008) are
    a. 200 or 300 hours of specialized appraisal training with about 13 separate examinations over the course material.
    b. At lease a 24 or 36 month apprenticeship period with a supervisor co signing every assignment. The 24 month apprenticeship period is for residential appraisers and the 36 month apprenticeship is for commercial appraisers.
    c. An Associate’s Degree from an accredited college or university for residential appraisers and a Bachelors Degree for commercial appraisers. There are alternatives to the college degrees but they are actually more difficult to obtain than a degree.
    d. A comprehensive examination administered by the State of Indiana. This examination is four (4) hours long for residential appraisers and eight (8) hours long for commercial appraisers.
    e. There is a Continuing Education requirement of 28 hours every two years. This CE must be focused on appraisal topics.
    2. Indiana Real Estate Brokers. The current requirements and qualifications are;
    a. Be 18 years old.
    b. Take a 54 hour class focused on real estate sales to get the salesperson license and then a 54 hour class focused on real estate sales to get the brokers license. There is some discussion of appraisals in the broker course but it prescribed by the state to be limited to
    c. Been a real estate salesperson for one year.
    d. Pass a test focused on the sale of real estate to get the salesperson license and then again to get a brokers license.
    e. There is a Continuing Education requirement of 16 hours every two years. This CE is usually focused on sales work not appraisal.
    Here are the education requirements for real estate salespersons and brokers. Please notice the required topics and how they relate to appraisals.
    The requirements for salesperson and brokers only include five (5) hours of Real Estate Valuation training. Essentially this means, the licensed or certified appraiser has extensive training in all phases of the appraisal of real estate (200 or 300 hours of classes plus the degree) but the real estate broker has only five (5) hours of “Real Estate Valuation” education. The real estate broker is not even required to take an ethics and rules class which is required for appraisers and updated every two years.
    The current law makes the real estate broker on par with the licensed or certified appraiser despite the disparity in training and experience. The only limitation imposed on broker – appraiser is the inability to do appraisals for banks, savings and loans and credit units where the loan amount exceeds $250,000. This limitation was imposed by the Federal Government because of FDIC insurance. In most communities in Indiana, this is not a restriction at all.
    Some people think it is possible to legislate that real estate brokers that do appraisals must take the two day ethics class (called USPAP) and the 7 hour continuing education class to maintain a status as a “broker – appraiser”. This would mean the broker – appraiser must at least KNOW the rules. It will not make them understand the logic and mathematics but hopefully they will at least know what they don’t know. The only thing wrong with this is a Broker can still do real estate valuations for properties under a $250,000 loan amount for a Federally Related Transaction regardless of the experience and training. This criterion is the same for a Certified Residential Appraiser and a Broker appraising anything from a 5 unit apartment building to commercial property. This does not make any rhyme or reason nor does it protect the people of Indiana. This can only add to the number of foreclosure for the State of Indiana.

  10. Richard Maloy

    To the person asking about the Alabama prohibition against agents providing BPO’s for any use other than advising clients for listing purposes: This has been the law in Alabama since 1990. I was co-chair of the coalition which drafted the Bill which became law. The brokerage community at the time had no push back because they said agents would be crazy to expose themselves to the liability of valuing houses for a fee. Starving agents are apparently having different thoughts about risk. The bottom line is that if BPO’s are being performed for purposes other than listing a property and a fee collected, they are violating State law.

  11. Patti Emmerling

    I see no reason why Brokers/Agents can not perform BPOs. With this said, however, they should certainly know and understand the state laws regarding BPOs in the area they are providing this service. For example, some states only allow brokers/agents to perform BPOs for the purpose of recommending a listing or purchase price opinion only. In this instance, a broker/agent may not be able to perform a BPO for the purpose of refinancing.
    In addition, I would highly recommend brokers/agents to be very careful with the terminology used in their reports. ‘Value’ is an appraisal term; ‘Price Opinion’ or ‘Market Analysis’ are the more appropriate terms for a BPO. I would also sugjest brokers/agents to include a disclaimer in their reports indicating the BPO is NOT an appraisal; it is an opinion of ‘price’ only; if party requesting this report wish to have an appraised value, they should seek the services of a licensed appraiser.
    Texas § 1103.004.
    Summary: Limited (b) This chapter does not prohibit: (2) a real estate broker or salesperson licensed under Chapter 1101 but not certified or licensed under this chapter from performing an appraisal in a transaction other than a federally related transaction; … (4) a real estate broker or salesperson licensed under Chapter 1101 from giving an opinion if the opinion: (A) is not referred to as an appraisal; and (B) is given in the ordinary course of the broker’s or salesperson’s business to: (i) a potential seller or third party regarding the recommended listing price of real property; or (ii) a potential purchaser or third party regarding the recommended purchase price of real property.

  12. are broker price opinion reports on residential properties legal in Indiana??

  13. J Prost

    Appraisers inflating values and meeting known pre-determined values helped lead to the sub-prime fiasco; most banks are no getting an appraisal and a couple bpo’s to try and actually determine a value. You are’nt supposed to take just 1 Dr.’s opinion, right?

  14. Kolase

    Excuse me, appraiser are not trying to sell a home for a commission nor are they trying to inflate a value of comps by not listing concessions for bigger commissions. I think they should 1 take loan officers off commission when they make loans unless they do profit shares bad loan no commission good loan share in the profit.
    Next year all appraisal will have tracking numbers like FHA and VA, they can track the loan officer , Brokers, Appraisers, if you have a Loan officer and a Broker or appraiser with a portfolio if bad sell offs then you know there is a issue.
    They are now trying to us BPO and rent surveys to make loans on purchases are they nuts!! appraisal are a couple of hundred dollars for 100,000’s worth of loans, come on quit be cheap you pass it on to the customers and you have no problems charge fees for frivolous things and I would think a home is a big investment for your clients to protect”Oh I forgot most of the big banks sell off the loans to investors and don’t care if the are correct”. Get real BPO for a purchase why not turn the two year old lose in the candy store!!!

  15. Anna

    Asset Companies, better known as BPO MILLS is a craze that has exploded to make the quick buck during this time of foreclosures. They are filled with kids that are strait out of high school in charge of handling files for these BPO Mills thruout the Country and even out of the Country if you can believe that! They are after their own agenda, don’t care about the values of homes, JUST GET AS MANY ORDERS AS POSSIBLE!
    I started in the BPO business last, January of this year. I have had personal experience of this BPO Company FORCING me to bring in the value of a property to a certain price that I just couldn’t do ethically. The kid on the phone was telling me my value was way too high which is why my BPO was not submitting. At the time this property was under contract within a couple of weeks after the listing agent reduced it over $200k. It was way undervalued but I am sure she was desperate to get any kind of contract in before the bank foreclosed and reduced it so much hoping the bank will accept it before she looses the listing to another agent working for the bank. Well after not getting thru to this kid on the phone I asked to speak to a manager. I explained that I could not bring in the value so low and why. This manager went on and said to me…I see LOTS of comps to use! I asked what she was looking at and she said I chuckled and asked her to tell me what someone from across the Country in the State of Utah would be considering a comp. I asked for addresses to argue this situation because I knew it was going to be wrong. Sure enough, these properties were a joke and no way comparable to the subject. I called her back telling her that I couldn’t use these comps, she put me on hold, came back SCREAMING in the phone telling me if I don’t bring the value of the BPO in at the price THEY NEED I won’t get paid & they will find someone else that WILL DO IT! My head was about to bust and since then I never got another BPO assignment from them. That situation brought me to research this BPO market and found some very disturbing blogs on a website that made me want to throw up! There are Realtors that are applied to numerous BPO Mills that will brag about doing 20/day. They drive around taking pictures, assistants at the office will pull comps. IN 3 DIFFERENT COUNTIES! They will just throw figures together, fudge the comp distance, fudge the sq.ft, bdrms, etc.
    THIS ALL HAS TO END, and I don’t understand how it got as far as it did. It is unfair to everyone and too bad about the banks having to pay more for an appraisal. Everyone has to pay. Why are the banks always getting the pity patter! They are just as bad! Yes, appraisers can be better as well, but our profession is going down the tubes with the constant fraud that is always allowed to happen until it’s too late!

  16. mike morell

    BPOs are popular because they reflect the opinion of a real estate agent. Agents are greatly qualified to do them because that’s part of they job from the first day they get licensed. There’s no client who doesn’t ask his agent “What do you think this property is worth?” and the agent is expected to come up with an intelligent estimation. The opinion that only appraisers can estimate values just doesn’t wash; especially if they’re not real estate agents.

  17. Lee

    I think BPO’s can be effectively completed by Brokers as competently as by appraisers. I am a REO broker, do BPO’s and have a very good idea what an asset is likely to sell for. An appraiser is no more competent at doing a drive by exterior than any experienced Broker. And, interiors are not really any different except for the fact that there are more knowns.
    Sales agents in Michigan are prohibited by law for doing BPO’s for a fee yet many supervisory brokers not only permit but condone such illegal practices.
    Unfortunately, not many people want to have to take the time to file a complaint with the state for violations of the law.
    Therefore, I believe that NAR should include that in the Standards of Practice and strongly encourage member associations to enforce reported violations.
    Until we police our own, things are not likely to improve.

  18. If you think about it there was the S&L problem during the 1980’s that created the need for so called certified appraisers. The feds didn’t think the real estate agents were doing a good job so they pushed for certified appraisers in the early 1990s and states had to follow suit. What was accomplished? Does an appraiser see as many properties as a real estate agent, I think not. Do they set the sales price with the owner? NO! Do they have additional insight about property values? They think so, but not really. Are they better at choosing comps? Not that I have ever seen.
    When appraisers do the job for free, then we will have a useful tool, but as long as they are driven by banks to get their business, their opinions are flawed. The problem of the 1980s has returned even though appraisers were out there in force. So the reason for their existence is questionable, they didn’t fix the problem.
    But that is understandable; it’s not the real estate agent or the appraiser’s opinion that decides value. It’s the bank and the buyer. Neither one of them cares what the appraiser thinks; their opinion is just an inconvenience. The bank is out to make money and the buyer wants the property. It won’t be long and the banks will be back at it, it all about making a buck.