Real Estate Professionals: Knowing Your Price Estimate Limits
| October 26, 2012
Real estate licensees are often called upon to provide a comparative market analysis (CMA) or estimate of market value in the course of providing service to consumers. It is important, however, for those professionals to understand the difference between their role as a real estate licensee and the role of an authorized real estate appraiser when estimating the value of a property.
Real estate licensees may provide a CMA or price estimate, either as part of their service package or as an independent item for which a fee is charged, but they have to make certain disclosures when doing so. Any CMA or price estimate provided by a real estate licensee is not to be used in lieu of an appraisal provided by a licensed appraiser.
Real estate licensees are reminded that they are not authorized to do value estimates that are precise and/or that will be used for legal purposes, which is typically the case in the division of assets in divorce proceedings.
While there is nothing preventing a lawyer from making such a request of a real estate professional, it is up to those professionals to know, understand and abide by what the limits of their authorization are. Some real estate professionals may be willing to provide a CMA in these circumstances, in the hopes that they ‘get’ a client out of it, but by doing so they are breaking the legislation and bringing the integrity of the profession into disrepute. Have you considered what would happen if your CMA was considered by the courts and you were deemed to be unqualified to provide an appraisal? Have you considered that the client may suffer damages as a result?
In order for real estate licensees to fulfill their responsibilities, they must advise lawyers or any person seeking a CMA for any purpose other than a trade or potential trade that they are not authorized to carry out this activity.
Have you ever been asked to provide a CMA or market value estimate and questioned what the purpose of you doing so was? Are there any steps you take to ensure any CMA you provide is connected to a trade in real estate or potential trade in real estate?