Official Opinion 99-15
Georgia Real Estate Commission
This is in response to your request for an official opinion on whether a licensed real estate broker who is not licensed as a real estate appraiser may provide a real estate broker’s price opinion to a lending institution for financing purposes. After reviewing the relevant statutes, I have concluded that the answer is yes. My reasons for reaching this conclusion are set forth below.
First, let me clarify my understanding of the underlying facts. As a part of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, the United States Congress began requiring that all appraisals used in federally related financial transactions be performed by licensed or certified appraisers. 12 U.S.C. §§ 3342, 3343, 3348. Several federal regulatory agencies subsequently issued rules waiving this requirement if the value of the financial transaction is at or below a de minimus amount of $250,000.00. See, e.g., 12 C.F.R. § 34.43 (Comptroller of the Currency); 12 C.F.R. § 323.3 (FDIC); 12 C.F.R. § 225.63 (Federal Reserve); 12 C.F.R. § 722.3 (National Credit Union Administration). Consequently, it has become common when a federally related residential lending transaction falls below the de minimus amount of $250,000.00 for lenders to seek value opinions known as “broker’s price opinions” from licensed real estate brokers, in lieu of an appraisal. You have asked whether this practice is permitted.
In 1990, the Georgia General Assembly enacted the Real Estate Appraiser Classification and Regulation Act (“Appraisers Act”), requiring that all persons performing an appraisal in Georgia hold an appraiser’s classification. The Appraisers Act authorized the Georgia Real Estate Appraisers Board (“Board”) to regulate the issuance of appraiser classifications, including the establishment of qualifications for each classification. O.C.G.A. § 43-39A-13. Pursuant to this authority, the Board established four real estate appraiser classifications. Ga. Comp. R. & Regs. r. 539-1-.16. Real estate appraisals may only be performed by persons, including licensed real estate brokers, who hold an appraiser classification. O.C.G.A. § 43-40-25(a)(15). However, the Appraisers Act does provide for certain exceptions to the classification requirement, including the issuance of a broker’s price opinion by a real estate licensee. O.C.G.A. § 43-39A-24 (b)(2). Thus, a licensed real estate broker who does not possess a real estate appraiser classification may issue a broker’s price opinion, but not an appraisal, to a potential seller, purchaser, landlord, tenant, or third party. Id. Since a lending institution is a third party to a real estate transaction, the Appraisers Act permits a real estate broker to issue a broker’s price opinion, as that term is commonly defined in the real estate business, to a lending institution. Of course, the lending institution must independently determine if utilization of a broker’s price opinion is sufficient for the particular transaction, including compliance with all federal laws and regulations.
For the reasons stated above, it is my official opinion that a licensed real estate broker who is not licensed as a real estate appraiser may provide a real estate broker’s price opinion to a lending institution for financing purposes.
EMILY P. HITCHCOCK
Assistant Attorney General
1 The phrase “broker’s price opinion” is not defined in the statute although the statute does specifically prohibit a person from referring to a broker’s price opinion as an appraisal. O.C.G.A. § 43-39A-24(b)(2). As a term of art connected with a particular trade or subject matter, the phrase “broker’s price opinion” must be given its ordinary meaning as used in the real estate business. O.C.G.A. § 1-3-1(b). As used in the real estate business, a broker’s price opinion is not an appraisal; it requires less analysis and is less expensive than an appraisal and does not have to meet the standards for appraisals established by Rule 539-3-.01 et seq., Georgia Real Estate Appraisers Board. Similarly, because it is not an appraisal, the provision of a broker’s price opinion cannot contribute to the hours of experience in real estate appraisal activity required by Rule 539-1-.16, Georgia Real Estate Appraisers Board.