There are three serious pitfalls to doing BPOS;

1. In some circumstances the production of BPOs is illegal. Companies operating in multiple states that pay you to do BPOs are uninformed or unconcerned about the illegality in NJ because they are not liable. You are! They will tell you they get lots of them from NJ. That is about to change.

2. Significant income derived from BPO production may make a broker liable for taxes associated with the employer/employee relationship rather than enjoying the exception provided by the safe harbor provision of the IRS code.

3. The FDIC/FNMA/HUD and other governmental authorities and GSEs are now aggressively pursuing litigation and mortgage buybacks based upon inadequate valuations. Significant BPO production may be outside the protection of your E&O coverage.


Real Estate licensees should be familiar with the limits on the exception in the Appraiser Licensing/Certification Law which applies to them. It seems clear that the exception does not apply to estimates of value given for a consideration to parties other than owners or prospective purchasers for their own knowledge or use.

The exception to the NJ appraiser licensing/Certification law is that a licensed real estate broker or salesperson may give or offer to give, for a fee or otherwise, counsel and advice on pricing, listing, selling and use of real property, directly to a property owner or prospective purchaser if the intended use of the counsel or advice is [B]