July 11, 2018
Pennsylvania Passes Law Allowing Limited Broker Price Opinions
Pennsylvania Gov. Tom Wolf on June 29 signed HB 863, legislation that allows the state’s real estate brokers, associate brokers and salespeople to provide broker price opinions. The law takes effect Aug. 28 and places significant restrictions on brokers, associate brokers and salespeople and limits the situations under which they may perform BPOs.
The law defines a BPO as “an estimate … that details the probable selling price of a particular parcel of real property and provides a varying level of detail about the property’s condition, market and neighborhood, and information on comparable sales.”
Previously, BPOs were not recognized under Pennsylvania law, and the preparation of comparative market analyses was limited to helping consumers determine an asking/offering price for real property or to secure a listing agreement with a seller.
Under HB 863, brokers, associate brokers and salespeople are limited to performing BPOs for financial institutions in conjunction with properties owned by the institutions after unsuccessful foreclosure auctions, modifications of equity credit lines, short sales and portfolio evaluations. More importantly, brokers, associate brokers and salespeople are explicitly prohibited from preparing BPOs for use in mortgage loan originations, eminent domain, tax appeals, bankruptcy or insolvency proceedings, divorce and equitable distribution, litigation and estate settlement.
Brokers, associate brokers and salespeople must obtain education on the preparation of BPOs in order to perform them, and must have completed at least three hours of continuing education on BPO topics during the current or preceding two-year license period. Additionally, salespeople must have been licensed for at least three years prior to preparing BPOs and each BPO must be co-signed by their broker or associate broker. The law also outlines the minimum contents of a BPO and specifies that compensation due salespeople for a BPO be paid only to their affiliated broker.
The bill’s lead sponsor was Rep. Greg Rothman, MAI, a Pennsylvania certified general appraiser and associate broker. The bill is the result of several years of negotiations on behalf of all stakeholders, including the Coalition of Pennsylvania Real Estate Appraisers, an entity founded and led by representatives of the state’s four Appraisal Institute chapters.
Prior to the law taking effect, the Pennsylvania State Real Estate Commission must enact rules detailing the qualifying and continuing education requirements for brokers, associate brokers and salespeople before they can provide BPO services.