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Association News, Industry NewsPAR urges changes to real estate licensing law
The Pennsylvania Association of Realtors® is recommending changes to the state Real Estate Licensing and Registration Act (RELRA) which address educational issues and broker price opinions (BPOs).
The educational amendments are based on recommendations made by PAR’s Educational Requirements Task Force and approved by PAR’s Board of Directors and will ultimately provide enhanced service to consumers and raise the level of competency within the industry. The 12-member task force was charged with examining the educational requirements for obtaining and maintaining real estate licenses in Pennsylvania and comparing them to other states’ requirements.
PAR’s Incoming President Bette McTamney, who chaired the task force, said, “The task force members saw that educational requirements for real estate licensees in Pennsylvania were below the average for other states. We believe the recommended changes reflect our rapidly changing industry and will help us better serve our clients.”
PAR’s Board of Directors is also recommending allowing licensees to conduct Broker Price Opinions under certain criteria to fulfill a niche in the real estate market, not currently being met by other products. The amendment to RELRA would further define a “comparative market analysis,” which currently exists under the law, to include a “broker price opinion.” A licensee would be able to prepare this written analysis for an existing or potential seller or buyer, a lien holder, or a person making a decision regarding the property.
It is not legal to perform broker price opinions (BPOs) in Pennsylvania. PAR is recommending this definition be added to RELRA but until it is passed and signed by the governor, real estate licensees cannot conduct BPOs in the Commonwealth. BPOs will still not be permitted for mortgage purposes. A certified appraiser must conduct a full appraisal for mortgage originations.
Guy Matteo, a PAR past president and task force member, said one of the most significant recommendations is expanding the pre-licensure and continuing education requirements. “PAR recommends that salespersons be required to take 90 hours of pre-licensure education, an increase of 30 hours; and continuing education requirements be increased from 14 hours to 18 hours,” Matteo said. “Based on our research, these educational changes will bring Pennsylvania licensees more in line with other states’ requirements.”
PAR’s recommendations were presented before the State Real Estate Commission last month. It is anticipated that legislation regarding the RELRA amendments will be introduced in the state legislature early next year.
“PAR believes the enhanced educational requirements will provide licensees with greater knowledge and understanding of current real estate trends and help them be better equipped to help their clients navigate the transaction,” McTamney said. “We want to provide licensees with valuable skills and tools to be the best resource for home buyers and sellers.”
PAR will launch an email campaign highlighting each of the proposed recommendations over the next several weeks. For more information, visit parealtor.org.
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Kim Shindle is the Manager of Media Relations at the Pennsylvania Association of Realtors®. |
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So, they’re all in agreement that the education requirements (and therefore, likely the level of education) is below the standard nationally; however, they’re also pushing for the licensees to be able to perform an additional service that they may – or may not – have been educated on?
I think one thing they should teach is lead generation and how to run a business. They make people small business owners and don’t address how to get business and maintain a database. They will add extra hours of stuff most agents won’t use. You know how many agents i know that after passing the test got a hand shake and a go get’em speech from their broker and that was it. I know brokers in the business for years that don’t have a database. Lead generation should be required.
This has been an issue for years. Most of the agents doing them see nothing wrong with it. Those who hire agents to do the BPO’s do not regulate whether or not a licensee is allowed to perform the task, they just need it done. If it is defined as a Brokers Price Opinion then it should be just that. There is not enough training involved for an agent to do them and it could leave the Broker on the hook for any issues that may arise from the BPO. If the appraisers are not willing to them for the $50-$75 fee that is their choice but please don’t allow the agents to just pick up the scraps of the appraisers. We need to be sure to uphold the integrity of our profession. Appraisers and Brokers should be concerned about allowing the agents to do this type of work. Has anyone thought about the compensation end? It is my understanding that most of these banks pay the agent directly for their services, does anyone see an issue with that? Seems to be a huge contradiction to change the BPO rules to allow Realtors / Salespersons to do BPO’s while increasing the educational requirements to get and maintain your license.
BPO’s and similar are not worth the pdf they are written on. Realtors do not know how to extract adjustments out of the market. Also, they do not verify their sales.. I was asked by a Realtor how does one know the difference in value from a direct ocean view condo from a residential view. I asked the Realtor what she had done in the past. Her answer was “I guessed”. I am a Realtor and Appraiser and I can tell you that Realtors in my office have no clue as to value… I worked for Keller Williams at the time… There are major companies that reconcile BPO’s and appraisals. Their attitude is if they are within 20% of each other to pass them through the pipeline.. So an Appraiser could value the property at $1,2000,000 while the BPO is $800,000. Realtor BPO’s do not abide by the definition of fair market value. This is a huge problem for our nation, but since politics from the NAR and possibly lenders (they want it fast and cheap) campaign contributions may win out… Greed has ruined our society.. I guess I will get heart surgery from an unqualified person…. After all, fast and cheap is the way to go.. And when you think about it, a home is only the single most priced purchase one will ever make…it’s not that important to get a qualified valuation.. lenders need to save $250 and be off by 20%.
The answer to this question lies in the very first post of this thread, by Walter, as follows:
“….Agents have not been trained in the USPAP requirements of not being an advocate for either party and many of the appraiser requirements to produce an unbias opinion of value…..”
The key here, is that the property management firms or lien holders that are requesting BPO’s are NOT asking for an opinion of value that meets USPAP requirements. They ARE looking for an opinion of the likely selling price of the subject property, which is exactly what agents prepare all the time.
Additionally, BPO’s are specifically NOT an unbiased report. They are biased in favor of getting the highest probable selling price for the lien holder, REO firm, etc… and the agent is usually anticipating their hard work will result in the listing that will ultimately occur.
These are the exact traits of a CMA.
Bravo Phillip! Well said. Brian, point well made and taken! Pre-licensing courses and licensing testing have little to do with real world real estate practice. The GRI should be the minimum education for a salesperson, and to take it a step further, I would advocate for the elimination of a salesperson license in favor of only brokers’ licenses, as several states have done. This way, we can also eliminate the pretense that brokers actually supervise their affiliated licensees. The vast majority of Realtors cannot even properly fill out the basic standard forms, so much more stringent education, testing, and enforcement is what will ultimately protect the public best. This business is too easy to get into and too easy to get out of. This is, hopefully, a first step in the right direction.
Can some appraisers help me with this question please?
Most appraisers I talk to say they will not do BPO’s and certainly will not do them for $50 or $75 bucks. Is this true? And if so, then who will do them if not real estate agents who are willing to supplement their income $50 bucks at a time and have enough knowledge about the market to arrive at a fair asking price.
The PA Assn of Realtors Business Issues Subcommittee came up with the proposed language for this change based on other states laws. Currently, there is no definition for a Broker Price Opinion (BPO) in PA, but we are allowed to complete “Comparative Market Analyses” for the purpose of obtaining a listing. This amendment will allow real estate licensees to prepare “Broker Price Opinions” for banks and other lien holders to assist them in determining the value of a property. This simply becomes another tool in PA that a lender can use to value a property when a full appraisal isn’t warranted or cost effective. BPOs have become an important tool for lenders in regard to dealing with the short sales and foreclosures that are more common in today’s real estate market. We are one of five states who have not yet adopted the BPO as such a tool.
The committee felt that training is a key to successful BPOs and NAR already offers a BPO certification program. The committee also felt that Realtors are well positioned as professionals to provide an opinion as to the sales price of a property for lenders, as they do for a sellers when pursuing a listing. The need for supervision of the Broker is an important issue that is already covered by the real estate regulations (RELRA).
Since I have just completed a Appraiser’s Principles course and being well aware of the need for someone to be allowed to do BPO’s legally,because we all know that agents now do them and charge for them and just call it a CMA/BPO. The only question is very simple why 30 more hours of education so you can sell real estate and 4 more hours to keep selling real estate and no education requires to ensure that the values are true and accurate. This needs education and supervision added, an appraiser is required 75 hours of classroom education just to start training and then another 2500 hours of working with a licensed appraiser in no less then 24 months. who is going to write the “BPO” rules like what must be in the report and how was it obtained. Price opinions should be done by people who are trained on how to form an opinion and not someone who is looking at listings. I know that Realtors are in need of more cash streams please lets see this for what it is and not call it protecting the public. Most brokers are 1 not aware of what agents are doing BPO’s and let alone supervising them I’ll get off the soap box now.
The additional requirements are a good 1st step, however, they don’t (and won’t) address the serious lack of broker supervision that we all know we have in this industry. Once someone is licensed (even under the proposed new guidelines), it’s simply “The Wild West” out there. We see it on a daily basis.
As far as the BPO’s. Surprise – Agents are doing them now, and have been doing them for years …. and …They look at you like you have 3 heads when you mention to them that BPO’s are NOT legal to do in PA.
One side of me thinks that BPO’s do fill a niche as you mention, and the other side says – “it will be a disaster to let agents do them”. If any change is made, allow BROKERS ONLY to do them and not agents / salespersons. If an agent meets the education requirements to achieve a Brokers License, then (hopefully) they are skilled enough to do a BPO correctly.
Let a BPO (Like it’s name suggests) actually require a Broker / Manager / Associate Broker. Just my .02
I am not so sure that the BPO chnage is a good thing. In the shrot sale world, I can tell you licensees are right now, everyday doing BPO’s. Many are not qualified to do so, most are doing them in exchange for a fee. clearly this is not allowed, but until disciplinary action is taken by the commission it will continue and I find it incredibly interesting that the recommendation is for any licensee to complete them. At the very least, a broker license or completion of additional basic appraisal courses should be required, with all due respect to those entering our profession, as Walter stated licensees are not trained in appraisal practices.
In my opinion, as an instructor of the courses, an agent and someone who trains new agents, increasing the pre license education requirement for entry won’t necessarily change things substantially in any way that produces a more qaulified professional for the consumer. Increasing the continuing education requirement could, but again 18 hours won’t be a substantial improvement over 14. Why not increase it to 30 or 40 and require testing for credit at the end of the course?
Sorry, after reading the statement again, it does not contradict. But the concern is still there, as appraisers are continually trained and required to follow strict guidelines to produce credible results. Appraisers can’t even talk to some parties involved in a transaction to ensure valuations are credible to the strict requirement of USPAP, and to let Realtors perform the same task, sets a dangerous precedend.
Does this statement seem to contradict itself?…. “It is not legal to perform broker price opinions (BPOs) in Pennsylvania. PAR is recommending this definition be added to RELRA but until it is passed and signed by the governor, real estate licensees cannot conduct BPOs in the Commonwealth”….. To have Realtors perform BPO’s for any other purpose then to list the property, is a slippery slope. Agents have not been trained in the USPAP requirements of not being an advocate for either party and many of the appraiser requirements to produce an unbias opinion of value.