The Sanatoga Post

Maybe a new reason to smile.

SANATOGA PA – With home sales nationwide already in the basement and threatening to sink lower still, the real estate broker who leads the Pennsylvania Association of Realtors – and who also operates a branch office at 2500 E. High St. – sees any boost to the housing market as a good thing.

Sales of existing single-family homes across the country fell 4.7 percent from December (2008) to January (2009), the National Association of Realtors (NAR) reported Wednesday (Feb. 25, 2009). Last month’s sales also were 7.1 percent lower than those of January 2008, it added. Those are two reasons why NAR’s Pennsylvania affiliate welcomes newly enacted plans to help current and future home owners, its president, Greg Herb, said.

• Sales of new homes during January, reported today (Thursday, Feb. 26, 2009), fared even worse. Read the story at MarketWatch.

Herb is owner and managing broker of Herb Real Estate, which operates offices in Sanatoga and Gilbertsville.

The national Homeowner Affordability and Stability Plan, discussed Tuesday (Feb. 24, 2009) by President Obama in his highly watched televised address to Congress, intends to provide access to low-cost refinancing and help reduce monthly mortgage payments for as many as 9 million U.S. home owners facing the prospect of foreclosure. A second initiative, the First-Time Homeowner Tax Credit, gives first-time buyers an $8,000 refundable tax credit on the purchase of a home in 2009.

• Who qualifies? First-timers are considered those “who haven’t owned a primary residence in the past three years,” according to Jay Brower, a CPA in the Philadelphia accounting firm of Gold Gocial Gerstein. “In the past, taxpayers had 15 years to pay back this credit,” Brower said, “but 2009 buyers are off the hook as long as they live in the home for at least 36 months.”
• Help for those who bought earlier. A smaller tax credit is available for homes purchased on or after April 9, 2008, and before Jan. 1, 2009, according to the National Association of Home Builders.

Both measures “can help invigorate the economy and the real estate industry overall,” Herb said, “by giving more residents the opportunity to save their homes and others a chance to purchase a home.”

A graph of home sales in the 19464 zip code from 2003 to 2008.

On the foreclosure front, at least, Pennsylvania seems to be faring better than other states. RealtyTrac, a company that monitors foreclosure activity, reported that national foreclosure rates decreased in January and that Pennsylvania ranked 29th in the nation for foreclosures, below the national average.

Graph from City-Data.com. Photo from Clipart.com

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HARRISBURG PA – Pennsylvania real estate brokers who offer drive-by estimates of a property’s value – sometimes called broker price opinions (BPOs) – are likely violating state law, an attorney representing the state Association of REALTORS® said Thursday (Feb. 19, 2003).

Consumers occasionally ask licensed brokers for a BPO to determine how much a home or other real property is worth for tax or estate settlement purposes. Some brokers charge a fee of between $30 and $75 to informally review the property and surrounding neighborhood, and supply a written estimate of how much they think it would sell for in its market.

BPOs are most common in rural areas, and represent an additional source of income for some brokers. They probably also are illegal, according to James L. Goldsmith, the association’s legal counsel.

Pennsylvania-licensed brokers and agents, under amendments to the state Real Estate Licensing and Registration Act (RELRA), can legally provide consumers with a “comparative market analysis (CMA),” Goldsmith explains. The CMA also is a written estimate of property value, but under law is offered only to help a represented seller or represented buyer (those under contract with a licensee) to determine an asking or offering price; or as an inducement to a property owner to list the property for sale with the licensee.

The expectation of a getting a listing agreement from an owner is what separates the legal CMA from the illegal BPO, says Goldsmith, who was the featured speaker on the topic during a telephone seminar broadcast statewide by the association. Without the anticipation of a listing, he adds, providing a written estimate of value constitutes an appraisal.

Under the state Real Estate Appraisers Certification Act, appraisals can be performed only by state-certified appraisers.

Appraisals adhere to strict and objective guidelines known as “uniform standards,” could take several weeks to complete, and usually cost 7 to 10 times more than a BPO. To save time and money, consumers may seek a BPO without ever intending to sell the property. Brokers would be wise to avoid such situations, Goldsmith advises, because the state Board of Certified Real Estate Appraisers can take enforcement actions for appraisal violations.

Although licensees conceivably could charge a fee for providing a CMA, Goldsmith suggests avoiding the practice. In crafting RELRA, legislators reasoned that the commission from a property’s sale, which may have resulted from a CMA, would be sufficient compensation for estimating its value. “Charging a fee begs the question of your motivation, if getting a listing was secondary,” he says. “It may be waving a flag that says, ‘Look at me’.”

Goldsmith’s message clearly distressed some of the seminar’s question-and-answer participants. A few admitted having offered BPOs in the past, and presented several scenarios under which they hoped their estimates might be considered legal.

Brokers “have to take the responsibility for determining the purpose behind” a consumer’s request, Goldsmith replies. If a BPO is requested by name, but the legitimate opportunity to obtain a listing is available, then licensees could reasonably provide a CMA without legal consequences, he says. “In some cases you may have to pull the answer from the requester,” he says.

Also during the seminar, Goldsmith:

• Cautioned that CMAs prepared by licensees should always be dated; be identified as having been performed pursuant to RELRA; and carry a conspicuous statement that their estimate of value was not conducted in accordance with uniform standards of appraisal practice.
• Suggested that, if licensees charge a fee for providing a CMA, they have the consumer sign a written fee agreement as required by RELRA.
• Recommended that licensees who provide a CMA by electronic means (via a website form or e-mail), send the recipient a separate e-mail that includes the appropriate statements on RELRA and uniform standards, and ask the consumer to send a reply e-mail that acknowledges having received it.