Appraisal Issues

The Minneapolis Star Tribune has an interesting article about appraisals – who can make them and what that means. The Minnesota Legislature is working on rules that would change the current arrangement allowing agents to determine a home’s value. The Appraisers are not so happy with this direction. They feel that the real estate agents do not have the training, nor experience to provide appraisals. Also since the real estate agent often works with the buyer, there is a potential conflict of interest.

At stake are the multiple requests that lenders make for valuations on every foreclosure that comes to the market. In Minnesota last year there were an estimated 120,000 broker price opinions conducted for lender-mediated transactions, not including those done for routine home sales.

State law already says that BPOs cannot be conducted to secure a mortgage, and the Dodd-Frank consumer protection rules that will be implemented in April say the same thing.

The bill is an amendment to current statutes governing the work of real estate agents and appraisers that defines a broker price opinion as one that “details the probable selling price of a particular parcel of real property” and spells out the duties of the licensee. It also makes it clear that a BPO is not subject to the same Uniform Standards of Professional Appraisal Practice that apply to appraisers.

Submitted by Minnesota Buyers Real Estate Agent, Mary Rugani.