Comparative Market Analyses and Broker Price Opinions Affecting Real Estate in Pennsylvania

Summary

During the recent 2013-14 legislative session, and at the urging of the Pennsylvania Association of Realtors®, Senate Bill 869 was introduced in the Pennsylvania Senate. If enacted into law, this bill would have radically modified the existing portions of the Real Estate Licensing & Regulation Act (RELRA) regarding when, and how, real estate brokers and salespersons could perform comparative market analyses (CMAs) and broker price opinions (BPOs). The legislation as written would have placed consumers and neighborhoods struggling with distressed properties at risk. Adoption of this legislation to expand the ability of a broker or salesperson to perform a BPO/CMA outside of the real estate brokerage context would have sent a shocking statement to Pennsylvania consumers that the state cares little about oversight and enforcement in the mortgage, valuation and real estate sectors.

What Steps Were Taken?

In December, 2012 a group of stakeholders (sales professionals, appraisers, and lenders) met to discuss this proposed legislation. As a result of this meeting, and in the spirit of attempting to reach a compromise to which all stakeholders could agree, the Coalition of Pennsylvania Real Estate Appraisers developed a good faith counterproposal that would allow for the limited expansion of the ability of brokers and associate brokers to provide CMA and BPO services outside of the traditional real estate brokerage context. Consistent with the stated intent of the proponents of this legislation, the CPREA proposed limiting the services that brokers and associated brokers could provide, to residential distressed sales transactions. In addition, the CPREA proposed that brokers and associate brokers providing these services meet certain minimum educational requirements, adhere to standards & guidelines, demonstrate that they are covered by adequate insurance, and ensure that compensation practices are consistent with those required of real estate brokerages.

In a move that was contrary to the spirit of stakeholder compromise, the state’s largest organization of real estate sales professionals completely dismissed the proposed changes, offered no counterproposal, and advanced this controversial legislation before the Legislature. The bill was formally introduced in the Pennsylvania Senate on April 18, 2013 as SB 869.

In response, the CPREA mobilized quickly, developing this website and undertaking a wide-reaching, grass roots lobbying campaign in Harrisburg and throughout the state. The renowned and respected firm of Pugliese Associates was hired to assist us in our lobbying efforts. Within a few weeks, we met with many members of the Senate, the House of Representatives, and various regulatory agencies, discussing the negative aspects and consequences of SB 869 that had not been previously considered. As a result – and with negative reactions to SB 869 from the Real Estate Commission, the State Board of Certified Real Estate Appraisers and the Department of State – the bill was tabled in the Senate and never moved for the remainder of the session, despite PAR’s announcement to its members that the bill would be passed before the year’s end.

This message to PAR’s members defied the urging of Lawmakers for forthright stakeholder compromise on revisions to the bill before it moved forward. PAR consistently rejected the CPREA’s attempts to work together on appropriate revisions to the bill as suggested by legislators, the Real Estate Commission, the PA State Board of Real Estate Appraisers, the Department of State and other stakeholders, including many of PAR’s own members. As part of its comprehensive strategy to address this legislation, the CPREA continued to actively encourage negotiations with the appropriate stakeholders to no avail. PAR has stated its intent to find sponsorship for another BPO bill, again allowing unqualified salespersons and brokers to provide valuation services, in the 2015-16 legislative session.

Whatever happens going forward, our primary goal was, is, and always will be, to look out for the best interests of Pennsylvania’s consumers and all residential and commercial real estate appraisers by promoting responsible real estate valuation.