Broker Price Opinion California

Sometimes a homeowner wants to know how much their property is currently worth. When considering the sale of a home, or for many other purposes, a Broker Price Opinion is helpful to know what the market really is for that house, condo or other property. | ORDER

Different real estate valuation products are appropriate for different situations. Real estate professionals are often asked to provide a comparative market analysis before listing a home for sale, often as a free service to the client. Getting a home loan to buy a property requires an appraisal from a license real estate appraiser. Required by most lenders, an official appraisal is typically paid for by the home buyer. But, there are many other situations in which an owner or a financial institution requires a professional estimate of property value, but not an official appraisal. This more affordable written valuation is called a Broker Price Opinion, or BPO.

Some California real estate brokers offer written opinions about the price of real estate without being licensed as appraisers. Mortgage lenders may order a specific type of valuation method for borrowers before the loan is approved.

Broker price opinions are defined by federal law (12 U.S.C. § 3355, enacted as a part of the Dodd-Frank Wall Street Reform and Consumer Protection Act) as an estimate prepared by a real estate broker, agent, or sales person that details the probable selling price of a particular piece of real estate property and provides a varying level of detail about the property’s condition, market, and neighborhood, and information on comparable sales, but does not include an automated valuation model.

The definition in the law is broad. BPOs are not an estimation of a property’s value by a neighbor or long-time resident of the community. The operative term defined in the federal law, however, is “prepared.” Broker price opinions are more than just off-the-cuff “guesstimates” of selling prices — they are carefully prepared analyses. There are two main types of opinions regarding the price of property that are prepared by real estate brokers or agents. A BPO looks at the characteristics of the property itself, and is an opinion on the price that could probably be received if the property were sold in a regular arms-length transaction. The laws in some states do not distinguish broker price opinions from comparative market analyses. A comparative market analysis looks at the prices obtained for comparable real estate in the same area. And the value is based on comparisons with similar properties.

Agents complete BPOs either through a drive-by or internal viewing of the property. A drive-by BPO is more detailed than its name would imply, and involves estimates of a number of things about the property, including the number of rooms, room sizes, and square footage. An internal BPO requires all of the information in a BPO, plus verification of the number of rooms and measurements of the square footage. Photographs of the interior of the property are also required. In most states, “allowing” broker price opinions merely means that the state does not prohibit BPOs. In thirty-eight jurisdictions, there is minimal state regulation of BPOs beyond a distinction that real estate brokers are exempt from the laws requiring licensure as an appraiser. Additionally no training is required beyond the normal educational requirements for a real estate license.

A BPR is different from an appraisal. A BPO is not necessarily performed by a professional state-licensed or certified appraiser. A BPO is typically prepared by a real estate broker, and is another tool that a lender might use to evaluate the collateral for a loan. A BPO, as originally intended, does not comply with USPAP Uniform Standards of Professional Appraisal Practice. BPOs were designed for brokers to assist home buyers and sellers in arriving at a list or purchase price, or purposes other than mortgage financing.

Often taking less than 24 hours, a Broker Price Opinion is cheaper, faster and easier to schedule than a licensed appraisal, and can sometimes include additional information that may not be provided with an appraisal, such as: pros and cons, building report, county assessor record, investment opinion sold properties report and area lenders report. The BPO may be requested for any kind of property, including single family home, condo, multi-family, commercial property or land.

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Copyright © This free information provided courtesy L.A. Loft Blog with information provided by Corey Chambers, Realty Source Inc, DRE 01889449. We are not associated with the seller, homeowner’s association or developer. For more information, contact 213-880-9910 or visit LALoftBlog.com Licensed in California. All information provided is deemed reliable but is not guaranteed and should be independently verified. Properties subject to prior sale or rental. This is not a solicitation if buyer or seller is already under contract with another broker.

How Runaway Inflation Kills Rent Control

Does inflation spell the beginning of the end for rent control?

REAL ESTATE NEWS (Los Angeles, CA) — Many renters have no idea of what happens to rent control during inflation. Severe inflation obstructs or ends rent stabilization one way or another, because landlords must raise rents enough to account for inflation. In general, 7% inflation means that rents can go up about 7% per year. When inflation rises to 10%, 20% or more, that’s how much rents must eventually go up. If the city does not allow landlords to promptly raise the rent to cover inflation, then maintenance and enjoyment of the property suffers, as landlords must find other ways to make up for the shortfall. Whenever cities attempt to prevent landlords from recouping rising costs, property values drop, then neighborhoods suffer from increasing crime, budget deficits, deterioration and blight.

Rents can be increased up all the way to the market rate when a tenant: voluntarily moves out; does not pay rent and is evicted; violated the lease agreement and is evicted; is evicted for failure to comply with a Tenant Habitability Plan; is evicted per a City Attorney order or if the tenant accepts a Tenant Buyout Agreement.

Landlords may also raise rents when they hear that an additional tenant is moving in. Tenants may be charged by the landlord an expanding number of surcharges and fees to help pay for the growing rent control bureaucracy. Landlords may also charge the tenant for some improvements made to the unit, renovations to the building, hazardous material removal and seismic retrofit. Landlords may charge for unexpected increases in expenses that results from many costs, including inflation.

Landlords may also raise the rent to full market price by evicting the tenant if one of the following occur: Failure to pay rent; Failure to fix or address a violation of the rental agreement; Creating a nuisance or causing damage to the rental unit; Using the rental unit for an illegal purpose; Failure to renew a similar rental agreement; Failure to provide the landlord reasonable access to the rental unit; or if the person at the end of the lease term is a subtenant not approved by the landlord.

Additional reasons to evict the tenant and fully raise the rent include: The owner, or immediate family member will move into the rental unit; A resident manager will move into the rental unit; Demolition and permanent removal from the rental market; Government order; or Conversion to affordable housing. If the eviction is of no fault by the tenant, then the property owners may be required to provide some relocation assistance compensation.

Many property owners benefits from a plethora of exemptions from rent control, especially in Downtown Los Angeles. These include: luxury properties; properties that are privately owned by individuals; properties that are very old, very new etc. Most DTLA lofts have plenty of exemptions.

Big cities in California, such as Los Angeles, have a sprawling, growing bureaucracy that tries to help renters to keep rents somewhat stable. 64% of Los Angeles residents are renters, and many don’t understand that rent control and rent stabilization can only do so much to help temporarily. Eventually, the economic laws of supply and demand overrule any temporary government measures. Additionally, bureaucratic laws create additional costs, more administration fees and more legal costs, which eventually get passed on to renters. In the mean time, the supply of housing gets more constricted and limited if property owners are not allowed to charge market rates. That bureaucracy increases rents in the long run, as it causes artificial housing shortages. When the economy stagnates, homes are eventually vacated, run down and torn down, like we’ve seen in many neighborhoods of the rust belt over the last 30 years.

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Los Angeles, CA rent stabilization meets inflation: Which buildings have the most exemptions?

Copyright © This free information provided courtesy L.A. Loft Blog with information provided by Corey Chambers, Realty Source Inc, DRE 01889449. This is not to be taken as legal advice. Consult with an attorney regarding legal questions, and consult with the City of Los Angeles regarding local ordinances. We are not associated with the seller, homeowner’s association or developer. For more information, contact 213-880-9910 or visit LALoftBlog.com Licensed in California. All information provided is deemed reliable but is not guaranteed and should be independently verified. Properties subject to prior sale or rental. This is not a solicitation if buyer or seller is already under contract with another broker.