TREC adopts changes to rules for consumer notices, BPOs and CMAs, and more

The Texas Real Estate Commission met on November 13 and adopted amendments to existing rules and proposed others. In addition to the changes below, the commission made changes to how team names can be used in advertisements, tweaked rules regarding use of standard contract forms, and proposed amendments to TREC forms. Those changes will be reported in upcoming posts.

New rules for links to Consumer Protection Notice and Information About Brokerage Services form

The adopted rules clarify that sales agents, along with brokers, must provide a link to the Consumer Protection Notice form in at least 10-point font in a readily noticeable place on the homepage of their business websites. The footer of the website is an acceptable place as long as it’s readily noticeable. For both the Consumer Protection Notice and the Information About Brokerage Services form, TREC added a new option for using only “TREC” as opposed to “Texas Real Estate Commission” in the link so long as the font size is increased to at least 12 point.

The term “business website” means a website that is accessible to the public, has content controlled by the license holder, and has information about the license holder’s real estate business. For social media accounts, the links may be located in the account’s profile or on a separate page or website through a direct link from the profile.

TREC adopted a change to assess administrative penalties from $500 to $3,000 per violation per day for violating the rules about providing TREC’s Consumer Protection Notice and the Information About Brokerage Services form. Previously, penalties for violating these rules would have been assessed under a higher penalty range.

These rules will go into effect 20 days after the rules are filed with the Texas secretary of state, which has not happened as of this writing.

New statement required for comparative market analysis, broker price opinion, and sales price estimates

TREC adopted changes that require license holders to provide new language in writing when giving a broker price opinion, comparative market analysis, or estimate worth or sales price—which includes automated valuation models (AVMs)— to consumers. MLSs and RPR should provide the disclaimer when analyses are created through these platforms.

The new required disclosure statement needs to be reproduced verbatim and in at least 12-point type: “This represents an estimated sale price for this property. It is not the same as the opinion of value in an appraisal developed by a licensed appraiser under the Uniform Standards of Professional Appraisal Practice.”

This rule will go into effect 20 days after the rules are filed with the Texas secretary of state, which has not happened as of this writing.

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19 Responses to TREC adopts changes to rules for consumer notices, BPOs and CMAs, and more

  1. ddavis1038 says:

    Glad to see it….

    Like

  2. Trec, please automatically have the verbage required at the bottom of every CMA printed or emailed.

    Thank you for your consideration,

    Like

  3. Curt Labby says:

    Too wordy about CMA Disclaimer. WHY NOT JUST STATETHAT this Xama is NOT an Appraisal performed by a Licensed Apprsiser.

    Like

  4. This is OK. In balance, Appraiser can better statiscally evaluate the value of a property with no bias whereby the Realtor can evaluate the emotional and the statiscal value of the property with bias. This is for homes only. Appraiser are much better at evaluating commercial properties.

    Like

  5. Ted Kasper says:

    My experience has been that most REALTORS…have a better handle of the value and selling price of a property than the appraiser. We sell properties every day in areas that we are quite familiar with. The value of a property IS what the buyer will pay.

    Like

    • Bill Barton says:

      True, but the appraisal is for the lender. The current buyer may be willing to pay more than other buyers (especially in multi offer situations) for the home. However, if the home is returned to the bank, the lender has to ensure their portion of the investment is covered. That’s really the point of the appraisal.

      Like

    • RB says:

      So true. Appraiser lean toward fear of overpricing and devalue properties more often since the real estate crash of 2008.

      Like

      • SB says:

        Typical Realtor response. If, an appraiser, appraises 2 houses a day that mea, at a minimum, they are doing an in-depth evaluation of 6-8 Sold Homes, 4 Listings, plus the 2 Subject properties, for a total of 14/day*5days = 50sales and listings/week * 50weeks= 2500 properties not to mention all the market and neighborhood analysis, analytics and regression analysis that goes into a market. How many does a realtor sell? There is a reason institutions do not allow a realtor to VALUE a property, and these responses prove the correctness of this procedure. Yes, I am an appraiser. Yes, I am also a Realtor as are the appraisers I collaborate with on market conditions. Appraisers deal in verifiable data, not emotion. The lenders have an appraisal done to evaluate their security. It has nothing to do with the buyer. If they want to buy it for $xxx, then write a check. If you want someone else to buy it for them, so they can “rent it” from them for the next 30years, they have to play by their rules. If, an appraisal comes in under sales price, the buyer has the option of putting more down. In the markets I work, I find the knowledgeable Realtors know when they do a contract, if it will appraise out. The Knowledgable Professional Realtors are NEVER surprised by an appraisal (in my markets).

        Like

      • Bill B says:

        I agree with 95% of what you are saying (see my response to another commenter in this thread), however, appraisers are not infallible. I had a client who bought a new home from a builder and it appraised (VA) for $415K in Dec 2015. When he tried to sell it for $421K 17 months later, a different VA appraiser gave it a value of $365K. I live next to the house in question and my assessment is this…it was probably over valued in 2015 and under valued in 2017. Based on ‘comparable’ homes that have sold in this subdivision (and nearby), there is no way this home lost that much value. Obviously he is now stuck with this home as a rental.

        I had another client who was buying a new Express Home and the VA appraiser came in $10K under value on a $211K home. His appraisal research was done by an apprentice and apparently no one checked his work. One of his ‘comps’ was a 2-story, preowned home which was in no way comparable to the 1-story home he was assessing. Express Homes are built exactly the same for each floor plan (clients cannot upgrade anything). In this particular case the only thing that varied was the elevation and lot location. On that very same street at least 4 other homes, with the exact same floor plan, had been appraised for VA and FHA loans in the last 3 months with no major issues. The house my client was buying was even on a corner lot and was appraised thousands less than the other same homes. When the appraiser was provided with the other comps he refused to change his appraisal which resulted with my client not able to complete the transaction. It also cost my client a couple thousand dollars out of pocket because he had to stay in a hotel with his wife and pets while they switched his contract to a different property (exactly the same as the one he was buying in the same neighborhood) and that one miraculously came in at value.

        By far, the majority of appraisers are way more qualified to determine market value than a realtor or anyone else…but it is still an opinion and it is not always perfect.

        Like

      • SB says:

        I agree, no one is infallible, we are all human and make mistakes. I feel the Realtor needs to understand, a BANK hires an appraiser to give his “opinion of value” to protect their interest in a security, based on an analysis of verifiable data at a certain time (date), so the BANK can make a lending decision. Problem is when they decide they don’t want to make that decision, “it is the appraisers fault”. Another thing is some Realtors do not understand the guidelines/restrictions placed on the appraiser by the GSE, VA or FHA.

        Like

      • Typical Realtor says:

        I have had many Appraisers come into a neighborhood……knowing nothing about the neighborhood, the subdivision, the area of town…..nor who always knew how to ‘pull’ “Apple to Apple” Comps on a “subject Property.” In the last 12 years, I have had one, ONE property ‘not appraise’…..and it turned out that the “Lender” actually knew this Appraiser and the Lender (not the Seller) owned other properties within a few miles of the subject property. The Appraiser picked rental / income properties to compare to a newly renovated subject Property…..that were in what he thought was the same subdivision……but in fact…..they were in much different Sections of Subdivisions that had the same name and in sections that were far to the west of the subject property and past several major north/south avenues and streets. The Appraiser refused to use ‘Apple to Apple’ Comps of homes within a block or two of the subject property, even though the year built; the lot size; the square footage and many other details were identical. Not only did he appraise the property low….he appraised the property at $30,000 below the Contract Sale price and heavily criticized the Buyer’s Agent for allowing such a high price to placed in a Contract Offer. Obviously, the Buyers backed out and the transaction came to end. Within 4 weeks, in conjunction with another Buyer and another sale, the same property was appraised by another appraiser, for another Loan Approval……and it appraised at the Contract Sale Price…..which was identical to the first contract sale price. The transaction Closed. Fortunately, not most, but ALL of the Appraisers that I’ve worked with over the years have appreciated the ‘sharing of meaningful, ‘apple to apple’ Comps by Realtors to consider when conducting their appraisal….which only adds to the likelihood that the Appraisal Report and the Appraised Value are accurate and meaningful. Many Realtors are called upon to submit daily complex BMAs, CMAs, etc. that are required to contain and meet very detailed criteria required by very large Relocation Companies. These lengthy reports, which are often more detailed than an Appraisal Report…are then reviewed by a Relocation Coordinator within a Brokerage Company and the Relocation Company itself. The ‘take away’ ……. Realtors and Appraisers working together to ensure the inclusion of accurate statistics and data…..is a good thing —- Typical Realtor

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  6. Jim Ivy says:

    Websites are not measured in “points”, they are measured in “em” or “px”. A “point” is a measurement for printed material like books. Requiring a notice in “at least 10-point font” means that the notice must be 10/72 of an inch in height. That is a ridiculous requirement for a website because the agent has no way of knowing what display resolution the user will use to view the website. On a large desktop display 10-points would look quite small, but on a mobile phone display it would be gigantic!

    What TREC is specifying is unclear, but they seem to be saying that the disclosures can be in “small” type, 80% of the normal type on the webpage. Although that is what TREC is saying, there is no way to be certain that is what they thought they were saying! It seems to me that if the disclosures are important, they should be no smaller than the normal text used on the website.

    Here is a link to a calculator that will convert between ems, px, and pts, and a table that shows the relative size based upon a normal 12 px display. Basically 10pt = 13px = 0.8em = 80% = small

    https://websemantics.uk/tools/convert-pixel-point-em-rem-percent/

    When I am setting the default type for my websites, I like to use 18px for my normal text so that the site is easy to read. If I use 10 points for the disclosures, the disclosures are so small that they almost disappear. They would certainly meet TREC’s rule because they are 10 points, but I do not believe that they would meet TREC’s intention of having disclosures that are “readily noticeable”.

    Liked by 1 person

  7. ROBERT SHAFFER says:

    Most TREC changes are unclear. Pretty soon we will have to wear body cameras and record everything we do.

    Like

  8. Danny Evatt says:

    Excellent point Jim! Maybe TREC should re-write the rule (again) using website terminology (or give examples of acceptable website sizes using pixels, etc.) vs. a print point size. Good catch.

    Like

  9. JK Toler says:

    BAH HUMBUG! Our website Houston Association of Realtors is changing to MATRIX, which is AWFUL, Zip forms plus is changing…TREC is changing…but probably NOT for the Better..buyer’s are taking advantage of seller’s lately…makes me sick the LOW offers they want to submit…and
    fa la la la la…’tis the season to be jolly!

    5 years ago I talked to a TREC lawyer and complained about the obnoxious amount of forms
    and suggested they get rid of some of the extra forms…incorporate into the main one…but
    still the same old endless amount of papers that need to be printed, no one reads.

    IABS for example, How can a form mean anything, if all there is on it is an initial and at the first physical meeting the buyer is not even receiving a copy, unless you carry carbon paper, like I do.

    It is a waste of paper…when I started in my 20’s, now approaching my 80’s, there were 2 pages and 1 addendum…I think TREC just needs to justify lawyer salaries and change stuff…
    Again…BAH HUMBUG! J K

    Liked by 1 person

    • Marilyn S Jay says:

      And society as a whole was much different back then. When I have clients complain about all the notices / forms I just quietly mention that people have made it necessary.

      Like

    • Jim Ivy says:

      I believe you are correct. For a competent agent, the single 8.5″ x 14″ form was just as good and as the book length forms that we use today. Completing the forms with a pen was more efficient than completing the form on a computer and allowed the agent and clients to concentrate on the content of the agreement instead of the technical task of completing the form. The forms came with attached carbons, so there was no need for hauling around carbon paper or searching for a printer. No batteries required so you did not have to worry about running out of juice in the middle of drawing up the agreement. Hand delivering the offer to the listing agent gave us a chance to meet face to face with the other agent instead of leaving everything to a possibly incoherent email like we do today.

      Don’t get me wrong, I love my computers and phone gadgets, and they are more “efficient” for some tasks. But giving an incompetent agent a longer form and a computer does not make the agent competent and it certainly does not give more protection to the general public. It just increases the probability of a screw up during the process.

      Like

    • ddavis1038 says:

      Don’t know why you throw such a fit about IABS. All the law/rule says is that you must give it to the consumer at the first substantive conversation. Get their email & email it to them, hand it to them in person and make a note of the time, record it in an email to yourself, etc. You can ask that they initial and hand it back to you, but that part is NOT required.

      Like

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