Broker Price Opinions

The definition of a Broker Price Opinion is: “An estimate prepared by a broker, associate broker or salesperson 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, but does not include an automated valuation model.” (§ 455.201)

There are lists of permitted uses and prohibited uses, but a BPO does not have to be attached to an existing or potential transaction, unlike a Comparative Market Analysis (CMA).

Though the statutory changes went into effect in 2018, the State Real Estate Commission regulations establishing necessary educational requirements were not published until March 27, 2020. Remember that any licensee who wants to perform a BPO must complete certain prerequisite education requirements, that a BPO may only be performed for certain purposes and can’t be used for others. (§ 455.608f)

The definition of a Comparative Market Analysis is: A written analysis, opinion or conclusion by a broker, associate broker or salesperson relating to the probable sale or rental price of a specified parcel of real property in an identified real estate market at a specified time, which is prepared for any of the following:

1. An existing or potential seller, buyer, lessor or lessee of the parcel of real property.
2. A person making decisions or performing due diligence related to the potential listing, offering, sale, option, lease or acquisition price of the parcel of real property. (§ 455.201)

The main limitation on a CMA is that it must be done for an actual or potential client – whether that is a transactional party (buyer/seller/lessor/lessee) or someone making substantive decisions on whether to list or acquire a particular property.

Yes, CMAs are still legal. The definition has been slightly rewritten, but is essentially the same as before these amendments. CMAs and BPOs are both permitted, with differences in their preparation and permitted uses.

A BPO and a CMA are similar, in that they each provide an analysis/estimate of the probable sale price of a particular property. Both require a standard disclaimer (the same language that had previously been required for a CMA) that the pricing estimate is not an appraisal and has not been prepared according to the rules that govern appraisals.

The main differences are in the minimum required content of each type of pricing estimate, and the uses for each.

A CMA has no required content beyond the required disclaimer. A BPO requires a minimum of seven additional pieces of information (included in § 455.608f(c)), plus the signatures and license numbers of both the preparing licensee and the broker or a designated associate broker. Though some of these additional items might also be included in a CMA, they’re only required in a BPO.

Further, a CMA must be related to an actual or potential sale/lease transaction, while a BPO can be done in a set of four situations that are not necessarily transaction-related. For clarity, there is also a list of scenarios in which a BPO is not allowed.

Yes. Before performing a BPO, a licensee must:

• hold a license for at least three years;
• complete a commission-approved initial education course in the preparation of broker price opinions;
• continue to complete at least three hours of continuing education in broker price opinion topics during the current or prior license period.

All BPOs must be signed by both the preparing licensee and a broker or designated associate broker. The broker/associate broker must meet the same initial and ongoing educational requirements as the licensee who prepares the BPO.(§ 455.608f(i))(regulations § 35.404(a)-(d))

No. Any licensee – salesperson, associate broker or broker – may perform a CMA.

The commission has been approving initial education courses since early 2019 and has pre-approved four broker prelicensure courses on valuation for this purpose as well. Many real estate schools have already been offering these courses, and any licensee who took an approved course prior to the publication of the regulations will be in compliance with these rules. Contact your local school for additional information on course availability.

** NOTE: While in-person real estate education is being cancelled or postponed due to the various COVID-19 business closure orders it may be very difficult to find an approved course, as it is unclear whether any online providers are offering that curriculum at the moment.

Individual licensees must retain transcripts or certificates of completion for all qualified education courses as this information is not reported to, or maintained by, the State Real Estate Commission. Since the requirement is to take ongoing education every renewal cycle the best advice is to maintain the transcript for your initial education course indefinitely, and your continuing education transcripts for at least several renewal cycles to prove ongoing compliance.