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Hawaii legislators have changed Hawaii appraisal law to permit licensed real estate brokers and salespersons to provide so-called “broker price opinions” in transactions where a formal appraisal has not been prepared.
In its testimony to the Legislature, the Hawaii Association of Realtors noted that “the role of the real estate professional has evolved from that of the traditional listing agent to today providing important, market-based information and data relating to home prices for lenders, mortgage companies and servicers, asset managers, loss mitigation companies, real estate investment trusts, private equity firms, and hedge funds.” For example, as loan delinquencies have increased in Hawaii, a lender may use a broker price opinion to determine whether a short sale transaction should be approved, or whether a delinquent loan should be modified.
The new law states that appraisal regulation does not apply to a broker or salesperson who “provides an opinion as to the estimated price of real estate, regardless of whether the real estate licensee receives compensation, a fee, or other consideration for providing the opinion,” provided that (1) the price opinion states it is not an appraisal; (2) the real estate licensee doesn’t represent he or she is a licensed appraiser; and (3) the real estate licensee doesn’t receive any additional compensation just for providing the price opinion.
Hawaii appraisers and regulatory authorities generally supported the new law, after it was amended through the legislative process. While the law provides important protection for brokers, brokers still need to make clear, in bold or other obvious type-face, that any written price opinion is not an appraisal.
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