Parties clash in hearing over different methods of assessing home values

It came down to a matter of semantics over value and price.

Appraisers insist it takes a certified professional to accurately assess the value of a home.

Realtors would argue that they get a pretty good idea of home prices through competitive market analysis, or CMA, based on the price of similar homes that recently sold in the neighborhood.

Both sides testified Wednesday before the Nevada Real Estate Commission task force on broker price opinions, which are being commonly used by lenders looking to unload foreclosures and approve short sales in today's turbulent housing market.

The task force delayed any decisions about revising Nevada Administrative Code after a contentious two-hour hearing at Sawyer Building in Las Vegas and scheduled another hearing for Sept. 10.

Broker price opinion is a tool used by the real estate industry to determine a competitive listing price for a property. Brokers and real estate agents may perform a broker price opinion or BPO for the purpose of listing or selling a property.

When the broker or agent prepares a BPO for any other reason and receives compensation for it, they have violated Nevada Revised Statutes 645C, the task force said.

Language for proposed revision to the regulation states, "No fee or other consideration may be charged for such an opinion other than the real estate commission or brokerage fee that is charged or paid for brokerage services rendered in connection with the sale of the real property involved."

Al Martinez of Prudential Americana in Las Vegas said the uproar is coming from appraisers who feel that brokers are stealing their business. Banks are paying about $50 for a BPO, which barely covers expenses, he said. Appraisals typically cost $350 to $400.

"We do not try to estimate the value of property in a BPO," Martinez said. "We try to establish a sales price. They (banks) want to know what this property is worth and what can we sell it for in the current marketplace and in between they'll come up with a price."

Deeanne Rymarowicz, legal counsel for the Greater Las Vegas Association of Realtors and task force member, had a problem with the wording of a couple items in the revised proposal.

Specifically, the first draft defined a broker price opinion as a "written analysis, opinion or conclusion prepared ... for a seller, purchaser or existing third-party lienholder" relating to the estimated price of real property. The revised version had eliminated "third-party lienholder."

Rymarowicz also questioned whether the act of rendering a broker price opinion creates an "agency relationship." She believes it does not.

Virtually every aspect of a BPO is consistent with an appraisal except its lack of "certification" as required by law, said Debbie Huber, a Las Vegas appraiser who testified on behalf of the Appraisal Institute and other professional organizations.

BPOs are inappropriately provided in Nevada as a fee-for-service for a variety of purposes, including as a replacement for appraisals in mortgage lending transactions, she said.

"We firmly believe that real estate appraisals should be performed in accordance with uniform standards by individuals who can objectively demonstrate meaningful valuation-specific education, training and experience," Huber said.

Huber served four years on the Nevada Appraisal Commission and said she saw first-hand the "devastating results" of those who circumvent appraisal law.

If the BPO undervalues a foreclosed property, significant equity is lost by other homeowners in the neighborhood, Britt West of Appraisal West said. Conversely, if the BPO is too high, the home sits vacant and creates blight.

"Vacant homes invite crime and depress property values over time," he said. "Neighborhood safety is measurably diminished."

Task force member Pam Kinkade said she was "absolutely overwhelmed" by how little she knew about BPOs and how serious the situation was.

In looking at other states, she found that 64 percent said real estate agents can do a BPO "in the normal course of business." Nearly 30 percent of states don't specify the difference between opinions on value and price, she said.

"Our intent is not to eliminate BPOs," task force member Tony Wren said from Carson City. "We want to make sure it's used for the intended purpose."

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.