Texas Real Estate Sales Agent ExamReal Estate PracticeHard
A licensed real estate agent is preparing a Comparative Market Analysis (CMA) for a client. In order to provide the most accurate assessment, the agent includes data from recent sales, active listings, and expired listings. Which of the following is considered an ethical practice when presenting a CMA to a client?
- ACharging a separate fee for the CMA without prior disclosure to the client.
- BGuaranteeing a specific sales price based on the CMA results.
- COmitting properties with features that might negatively impact the client's desired price.
- DDisclosing that the CMA is not an appraisal and should not be relied upon as such.
Show answer & explanationAnswer & explanation
Correct answer: D. Disclosing that the CMA is not an appraisal and should not be relied upon as such.
Ethically, a licensee must clearly state that a CMA is a broker's opinion of value and not a formal appraisal, which can only be performed by a licensed appraiser. This manages client expectations and avoids misrepresentation.
Why the other options are wrong
- A. Charging a fee requires prior disclosure and agreement with the client; doing so without disclosure is unethical.
- B. Guaranteeing a sales price is unethical and potentially misleading, as market conditions can change.
- C. Omitting relevant data to influence a client's perception is unethical and constitutes misrepresentation.
CMA vs. Appraisal Disclosure
When presenting a Comparative Market Analysis (CMA), a real estate licensee must ethically and legally disclose to the client that the CMA is an opinion of value and not a formal appraisal, which can only be conducted by a licensed appraiser.
- CMA is a marketing tool, not a legal valuation.
- Appraisals are performed by licensed appraisers.
- Disclosure prevents misrepresentation and manages client expectations.
Memory trick: CMA: Compare, Clarify, and be Clear!