The Georgia Real Estate Appraisers Board (GREAB) consists of the following five members:
The Real Estate Commissioner acts as the Board's Chief Executive Officer. This blog will provide comments on current appraisal topics and summaries of the Board's Monthly meetings for interested appraisers and members of the public.
Sunday, April 05 2009
In its March Newsletter, the GREC takes the position that BPOs are a permissible exception to the Georgia Appraiser Classification and Regulation Act (Appraiser’s Act) when performed by a real estate licensee who does not hold an appraiser classification - even if the BPO is estimating value for use in a mortgage transaction.
In arriving at the conclusion that a BPO is an exception to the Appraiser’s Act, the Commission quotes O.C.G.A. 43-39A-24 (b) (2) which actually limits the exception afforded BPOs to use only when recommending “listing, lease, rental, or purchase price” (emphasis added). The exception to the Appraiser’s Act for real estate licensees reads as follows: The Appraiser's Act shall not apply to:
A real estate licensee licensed in accordance with Chapter 40 of this title who, in the ordinary course of real estate brokerage business, gives a broker’s price opinion, competitive market analysis, or any other written or oral opinion to a potential seller, purchaser, landlord, tenant, or third party as to the recommended listing, lease, rental, or purchase price of real estate or real property; provided however, that this opinion as to the listing, lease, rental, or purchase price shall not be referred to as an appraisal; (emphasis added)
This exception only applies to an opinion “as to the recommended listing, lease, rental, or purchase price” of real estate. It clearly does not include the use of BPOs for expressing an opinion of value which would require licensing under the Appraiser’s Act. The article appears to treat price and value as though they were synonyms. They, of course, are not [price is generally considered the amount asked, offered, or paid for property – while value expresses a monetary relationship between properties and those who buy, sell, or lease those properties; the worth of something (see USPAP 2008-2010); also see common dictionary usage]. Distinctions between price and value are rooted in Adam Smith’s Wealth of Nations and taught in all real estate pre-license courses and all appraisal pre-license courses in Georgia and all other states.
More importantly, nothing in the exception would permit the BPOs to be used for mortgage loan purposes. BPOs ask for both price AND value (see Fannie Mae BPO form) and BPOs are used for underwriting loan collateral based on the value – a use not authorized by the exception quoted.
The Georgia Attorney General issued an opinion supporting the GREC on October 1, 1999 (see Official Opinion No. 99-15 written by Emily Hitchcock, Assistant Attorney General). However, that opinion also failed to address the “price” limitation on the exception provided in the Appraiser Act. The Attorney General should be asked for an opinion based on the words “price” and “value” having distinctly different meanings.
The actual wording contained in the exception couldn’t be clearer – the exception only applies to recommendations of “price” and NOT “value”. However, the Commission, in the article, blurred the distinction between the two words by inserting the word “value” in its quote of the code section, yet the word “value” does not actually appear in the code section.
The article states:
The law provides that a real estate licensee, “in the ordinary course of real estate brokerage business,” may offer an opinion of value “to a potential seller, purchaser, landlord, tenant, or third party as to the recommended listing, lease, rental, or purchase price of real estate or real property.” (Emphasis added).
Note, however, that the phrase “may offer an opinion of value” is inserted by the Commission – it does NOT appear in the actual law. The law clearly only applies to “price” and without disregarding the distinction between price and value, the law cannot be used to support either the Commission’s conclusion or the opinion of the Attorney General. Appraisers should ask the GREAB to review the article and seek compliance with the clearly worded exception to the Appraiser Act.