One of the many benefits of Act 112, which went into effect November 25, 1999, is the reinstatement of a real estate licensee's ability to perform a comparative marketing analysis for clients and customers. That ability had been lost with the enactment of the Real Estate Appraisers Certification Act, which made it illegal for anyone who was not a certified appraiser to perform real estate appraisals in non-federally related transactions after September 3, 1998.

Act 112 specifically includes in its definition of broker, "any person who, for another and for a fee, commission or other valuable consideration . . . undertakes to perform a comparative market analysis." Similarly, the definition of a salesperson is amended to read, "any person employed by a licensed real estate broker to perform comparative market analyses . . ."

The act supplies a very clear definition of what a comparative market analysis is:

A written analysis, opinion, or conclusion by a contracted buyer's agent, transactional licensee or an actual or potential seller's agent relating to the probably sale price of a specified piece of real estate in an identified real estate market at a specified time, offered either for the purpose of determining the asking/offering price for the property by a specific actual or potential consumer or for the purpose of securing a listing agreement with a seller. [emphasis added]

Who can perform a CMA?
As of November 25, 1999, any real estate broker or salesperson can perform a CMA, regardless of whether they hold a Certified Appraiser license. It is important, though, to understand that a CMA is limited in scope to establishing the asking or offering price for a specific property and for a specific client or customer. Any activity that attempts to valuate a property for a purpose outside of this limited scope would not fall under the definition of a CMA and would require a Certified Appraiser license to perform.

Can a licensee charge a fee for a CMA?
Licensees may charge for a CMA. If the CMA is part of the licensee's fee for the general services provided as a buyer agent or listing agent, no additional contract or writing is required. If, however, a transaction licensee or a licensee who did a CMA as part of a listing presentation, but failed to get the listing, wishes to charge a fee for that service, a written service agreement must exist between the licensee and the consumer who received the service. This written agreement must include all the points required of a written contract between a broker and a consumer whenever a fee is to be charged. Those requirements are:

1. A statement that the broker's fee and duration of the contract have been determined as a result of negotiations between the broker and the consumer.

2. A statement that describes the nature and extent of the broker's services being provided to the consumer and the fees that will be charged.

3. A statement that identifies any possibility that the broker of any licensee employed by the broker may provide services to more than one consumer in a single transaction and, if so, a statement of the duties owed to the other party and whether the broker may accept a fee for those services.

4. In an agreement between a broker and seller, a statement of the broker's policies regarding cooperation with other brokers, a disclosure that a buyer's agent will represent the buyer (even if compensated by the broker or seller), and a disclosure of any potential for the broker to act as a disclosed dual agent.

5. In an agreement between a broker and a buyer, a statement that identifies any possibility of the broker's compensation being based upon a percentage of the purchase price, a disclosure of the broker's policies regarding cooperation with listing brokers willing to pay buyer's brokers, a disclosure that the broker will represent the interests of the buyer (even if compensated by the listing broker or seller), and a disclosure of any potential for the buyer broker to act as a disclosed dual agent.

6. A statement that describes the purpose of the Real Estate Recovery Fund and a telephone number of the Commission where consumers can receive further information about the Fund.

7. A statement regarding any possible conflicts of interest and informing the consumer of the licensee's continuing duty to timely disclose any conflicts of interest.

This written agreement is not necessary where no fee is being charged for the CMA.

What information can be included in a CMA?
The definition of a CMA does not address what may or may not be included in the "written analysis . . . relating to the probable sale price" of a property. Therefore, whatever a licensee deems important to the analysis can be included in the CMA, including a review of comparables or details of adjustments.

One item that absolutely must be included in the CMA is the following statement, printed conspicuously on the front page:

This analysis has not been performed in accordance with the uniform standards of professional appraisal practice which require valuers to act as unbiased, disinterested third parties with impartiality, objectivity and independence and without accommodation of personal interest. It is not to be construed as an appraisal and may not be used as such for any purpose.

The language of this statement may not be altered.

Can licensees perform Broker Price Opinions for a fee?
"Broker Price Opinion" is not a legally defined term, as are "appraisal" and "comparative market analysis." When a fee is charged for a BPO, it will either be considered an appraisal or a CMA. If it is determined to be a CMA (i.e., provided for the purpose of determining the asking/offering price for a property for the seller or buyer), then it falls within the scope of permitted activity for a real estate licensee. If, however, the BPO is determined to be other than a CMA, it will qualify as an appraisal, which requires an appraisal license to perform.

To avoid confusion, the term BPO should not be used for any written expression of value for a fee. "Appraisal" and "comparative market analysis" are the terms that should be employed, depending on the purpose and scope of the valuation.