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Dream Big!
The Realtor Code of Ethics addresses broker price opinions

Editor,

From EarlyBird news: To help members stay informed, FAR developed a white paper on BPOs that answers FAQs. View now (password protected) (http://www.floridarealtors.org/FARBusiness/HotTopics/index.cfm.)

There is one glaring omission from the white paper referenced above. In addition, providing a little more information might assist some Florida Realtors from getting in hot water.

The glaring omission is the fact that BPO’s, along with other estimates of real property value or price, are specifically addressed in Article 11 and Standard of Practice 11-1 of the Realtors Code of Ethics.

Article 11
The services which REALTORS® provide to their clients and customers shall conform to the standards of practice and competence which are reasonably expected in the specific real estate disciplines in which they engage; specifically, residential real estate brokerage, real property management, commercial and industrial real estate brokerage, real estate appraisal, real estate counseling, real estate syndication, real estate auction, and international real estate.

REALTORS® shall not undertake to provide specialized professional services concerning a type of property or service that is outside their field of competence unless they engage the assistance of one who is competent on such types of property or service, or unless the facts are fully disclosed to the client. Any persons engaged to provide such assistance shall be so identified to the client and their contribution to the assignment should be set forth. (Amended 1/95)

Standard of Practice 11-1
When REALTORS® prepare opinions of real property value or price, other than in pursuit of a listing or to assist a potential purchaser in formulating a purchase offer, such opinions shall include the following:
1) identification of the subject property
2) date prepared
3) defined value or price
4) limiting conditions, including statements of purpose(s) and intended user(s)
5) any present or contemplated interest, including the possibility of representing the seller/landlord or buyers/tenants
6) basis for the opinion, including applicable market data
7) if the opinion is not an appraisal, a statement to that effect (Amended 1/01)


In any written or oral opinion of value or price, it’s extremely important to identify the property and specify the definition of value or price used. Prices and values change over time, and specifying the effective date of value offers some protection to the individual offering the opinion.

There are numerous definitions of price and value. Two are used in the first paragraph of the white paper. In addition, try market value, taxable value, quick sale value, value as repaired, value as is, etc. Standard of Practice 11-1 includes this requirement to ensure the opinion of price or value is not misleading or misconstrued.

Each of the 7 requirements is included in Standard of Practice 11-1 for a reason. Adhering to SOP 11-1 not only assures the Realtor of compliance with the Code of Ethics, it helps the preparer with a defense if a later reader of the report decides to take legal action.

Although there is no specific definition of broker price opinion in the Florida statutes, the SERVICE is described in two sections of Chapter 475:

475.25 Discipline (1)(t) Has violated any standard for the development or communication of a real estate appraisal or other provision of the Uniform Standards of Professional Appraisal Practice, as defined in s. 475.611, as approved and adopted by the Appraisal Standards Board of the Appraisal Foundation, as defined in s. 475.611. This paragraph does not apply to a real estate broker or sales associate who, in the ordinary course of business, performs a comparative market analysis, gives a broker price opinion, or gives an opinion of value of real estate. However, in no event may this comparative market analysis, broker price opinion, or opinion of value of real estate be referred to as an appraisal, as defined in s. 475.611.

475.612 Certification, licensure, or registration required (3) This section does not apply to a real estate broker or sales associate who, in the ordinary course of business, performs a comparative market analysis, gives a price opinion, or gives an opinion of the value of real estate. However, in no event may this comparative market analysis, price opinion, or opinion of value of real estate be referred to or construed as an appraisal.


Florida Realtors should also be aware that many companies seeking BPOs and other low cost valuations of property do not have the best reputation for taking care of their bills for the service. There are dozens of bulletin board sites with anecdotes of slow and no-pay companies.

Francois (Frank) K. Gregoire, IFA, RAA
Gregoire & Gregoire, Inc.
St. Petersburg

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