Just when we needed the government to recognize that their involvement in the private sector caused the current banking crisis and the subsequent recession, due to political pressure that caused funding to flow through Freddie Mac and Fannie Mae like it was water, we now have them meddling in the valuation business.
Nevada’s establishment of new Broker Price Opinion (BPO) rules that take effect on July 1, 2009 will allow about 20,000 real estate agents to express “price opinions” upon which decisions will be based by buyers, sellers, lienholders and third parties “making decisions or performing due diligence related to the potential listing, offering, sale, exchange, option, lease or acquisition price of a parcel of real property.” In other words, for almost any purpose besides an application for a new loan.
One might ask, “are there any special qualifications required of an agent beyond the 1 or 2 weeks of real estate training required of agents for licensing to express such opinions?” The answer would be no. One might also ask, “is there any penalty for unqualified agents expressing opinions that are in error, and that may cost buyers, sellers, lienholders and others thousands or millions of dollars in losses?” Again the answer would be no.
So what the Nevada State government has done with this law is allow the entry of thousands of untrained individuals into the valuation business at a time when valuing real property has become more difficult than it has been in the last 10 years. Who exactly has this law been written to protect?
I have been a real estate broker for over 30 years and in 1991, after our country’s first financial fiasco with Savings & Loans, appraiser licensing was adopted based on a federal mandate. The appraisal business has come a long way since then, and appraisers are so much better qualified than agents with regard to the valuation process that the professions have parted ways. By allowing any real estate agent to act as a value expert is a giant leap backward.
One wonders if this new law and its timing has anything to do with the fact that appraiser’s have not been willing to provide market value opinions high enough to support higher listings and the upward pressure on prices (see “Realtors Say Low Appraisals Sinking Deals“).
For those party’s buying “broker price opinion” products from real estate agents in Nevada, I guess the government has set up a situation for you where its “let the buyer beware.” An army of unqualified real estate agents will be giving you a chance to purchase their opinion, but if it’s inaccurate you only have yourself to blame.
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This reminds me of a book I’m re-reading – Restoring The American Dream by Robert J. Ringer. He also felt very strongly against the government over-regulating private business and life in general.
It is a true statement that when any government took involvement in their private sectors there should be economical crisis. And this kind of involvement should take effect on general people too.
Yes i agree with you guys.
I don’t really agree.
Well for example, hopefully I’m not over-simplifying but back when the Federal Reserve changed the definition of “one dollar” from a literal receipt for 1/20th of an ounce of gold to basic currency, it allowed itself to print more money than was backed up by actual gold, or real value. This led to inflation that is now part of our problem.
I think you hit it on the head Ricardo, the government involvement in the money system appeared to be a good idea (because they wanted to expand the money supply), but you can see where it has led us. Now we are spending massive amounts of money we don’t have. The new BPO law that I discussed does the same kind of thing, it allows unqualified individuals to express “price opinions” that someone will rely upon. Who cares if its a wild and crazy thing to do, especially after our banking nightmare, if someone can get the votes I guess that makes it right.
I wonder why US Government should have bailed out Freddie Mac and Fannie Mae, who are principally owned by Chinese Government? It is their investment and it should have usual investment risks without someone backing it up if things go bad.