BPO legislation clears Senate subcommittee
After months of squabbling, a bill that would regulate broker price opinions (BPOs) prepared by real estate agents cleared the Arkansas Senate Committee on Insurance and Finance with a “do pass” recommendation.
The bill at issue — SB720 — is scheduled to go before the full Senate at 1:30 p.m. today. The battle lines are pretty well defined on this one, folks. On one side you’ve got appraisers claiming that BPOs — which are almost always cheaper to purchase than full appraisals — might in fact be used as appraisals. What’s wrong with that? According to appraisers, there’s a danger that real estate agents with either an interest in a property or a desire to tell a lender what he or she wants to hear might inflate or deflate the value of a home.
Meanwhile, Realtors have said the legislation at hand merely codifies and offers a regulatory system over something they’ve done for years. Furthermore, they’ve argued that it doesn’t make sense for a lender or anyone else to order a full appraisal when a BPO will do just fine.
You can see a summary of arguments from both sides by clicking here.
Here’s a fascinating part of this debate — in the aforementioned article, the argument was made that the bill simply regulates an already common practice and leaves it to the Arkansas Real Estate Commission to punish those agents who violate the terms of SB720. Bob Balhorn, lobbyist for the Arkansas Appraiser Association, said the law goes farther than that.
There is some evidence to back up Balhorn’s contention in this article that was written two years ago by Tim Grooms, counsel to the Arkansas Realtors Association. Grooms, in that article, advises real estate agents they could wind up facing a misdemeanor unless they put together BPOs in only limited circumstances.
In that article, agents are advised to render opinions on property value only in probate court, when asked by a property owner considering selling his property, for a third-party relocation property provided the agent has a chance of getting a listing or when ordered by a court. Furthermore, agents are advised to disclose in writing on any form presented with the BPO that the estimate is not an appraisal.
SB720, however, expands the circumstances under which BPOs could be written by appraisers. Should that law pass, real estate agents could write BPOs — and accept fees for them — to sellers considering listing real estate, people considering purchasing real estate or third parties related to the potential listing, offering, sale, exchange, option, lease, or acquisition price of real estate. Also, agents would be able to provide BPOs to lienholders in some cases.
Sen. Jonathan Dismang (R-Beebe), the bill’s sponsor, summed up the expanded authority to write BPOs by stating those could not be used when lenders originate loans, but could be used in cases of foreclosure, loan renewals or secondary mortgages.
UPDATE: The bill passed the Senate on March 9 and was transmitted to the house. We’ll follow it.
Benton resident. Rogue journalist. Recovering attorney. Email = Ethan@FirstArkansasNews.net.