Legislation that would clarify several aspects of an Illinois law governing broker price opinions and comparative market analysis has passed the state legislature and currently is under consideration by Gov. Pat Quinn, the Appraisal Institute reported July 23.
SB 3044 adds definitions of both BPOs and CMAs to the state’s Real Estate Appraiser Licensing Act and its Real Estate Licensing Act, and clarifies when and how BPOs and CMAs may be performed by brokers and managing brokers.
The bill was sent to Quinn June 27, and he has 60 days to take action.
According to the Illinois Coalition of Appraisal Professionals, “Defining and regulating these products will protect the public’s trust and reduce consumer confusion.” The bill was supported by ICAP after it carefully considered the landscape surrounding the issue in the state; the circumstances that led to the passage of this bill may not be the same as in other states considering similar legislation.
If SB 3044 is signed into law, the definitions for a BPO and a CMA in both the Real Estate License Act and the Real Estate Appraiser Act would be as follows: a BPO would be defined as “An estimate or analysis of the probable selling price of a particular interest in real estate which may provide a varying level of detail about the property's condition, market, and neighborhood and information on comparable sales.” A CMA would be defined as “An analysis or opinion regarding pricing, marketing, or financial aspects relating to a specified interest or interests in real estate that may be based upon an analysis of comparative market data, the expertise of the real estate broker or managing broker, and such other factors as the broker or managing broker may deem appropriate in developing or preparing such analysis or opinion.”
Under the bill, a broker or managing broker may prepare or provide a BPO or a CMA for a fee in the context of a real estate sales or leasing transaction for any third party making decisions related to the disposition of real estate, or for an existing or potential lien holder for reasons other than as the primary basis to determine the market value for a mortgage loan origination transaction.
Each BPO or CMA prepared or provided for a fee must contain certain information, including a disclaimer that “This is a broker price opinion/comparative market analysis, not an appraisal of the market value of the real estate, and was prepared by a licensed real estate broker or managing broker, not by a State certified real estate appraiser.” The bill fails to mention, however, if someone other than a broker or managing broker (such as a salesperson) is allowed to perform a BPO or a CMA. These provisions are added to the Real Estate License Act.
An existing exemption from appraiser licensing that permits real estate licensees to perform appraisals (for non-federally related transactions), BPOs, and CMAs is deleted from the Real Estate Appraiser Licensing Act, and is replaced with a provision exempting brokers and managing brokers from appraiser licensing only when providing BPOs and CMAs.
The legislation also would make several other changes to the state’s Real Estate Appraiser Licensing Act of 2002 to bring the state into compliance with federal requirements for state credentialing of appraisers. It also removes language in existing law that states that it is the intent of the legislature only to regulate the appraisals of real estate “in connection with a federally related transaction.”
Illinois became a mandatory licensing state in 2009.