Exposure time vs marketing time, just for fun

[George Hatch]

One of my pet peeves with the 1004 is WHY does it ask for Marketing Time when our opinion assumes the property has been exposed to the market.

Ask your user. Developing opinions of marketing time is a user-driven extra. It's not a requirement that's triggered by either USPAP or the definition of MV being used.

 

[glenn walker]

I thought I was only one who thinks that's redundant.

It is redundant in almost -all Residential Loan Production type assignments but it is what it is. Forget it and move on and if you ever start doing commercial or land transactions you will see how it can be relivant in that arena. I never fully comprehend it until we had started doing commercial land sales and development.

 

[KenAZ]

My dad was an appraiser 50 years ago when he trained me. We never even heard of these terms back then. Does that void all his appraisals? Were they considered inaccurate because of lack of Xxxx Time?

My opinion? The best and most accurate indicator of value on Residential properties would be the short 704 Form. We get our three comps, try to figure out the exact value of the subject, instead of worrying about all the crap that is useless information and does not help us determine value.

 

[George Hatch]

Okay, so let me ask you this, then: In your opinion do both of the following two sentences mean exactly the same thing to you?

• My opinion of value for the subject property is $300,000, based in part on an opinion of exposure time of less than 30 days.
• 
  
• My opinion of value for the subject property is $300,000, based in part on an opinion of exposure time of 9-12 months.

 

[Fernando]

Okay, so let me ask you this, then: In your opinion do both of the following two sentences mean exactly the same thing to you?

No

 

[Terrel L. Shields]

Without JG this thread is going to be no fun.

But



<---Exposure Time----------Effective Date---------Marketing Time---->

Reminds me -
Past (historical) time = Sales Approach
Today's "here, now, today" time = Cost Approach
Tomorrow's "anticipation of future benefit" = Income Approach

 

[RCA]

I know with MARS (R/earth) I could feed in DOM (Days On Market) as a measurable value to the regression and if I had enough data going back perhaps several years, if there were some correlation between DOM and Sale Price - it would find it. And interestingly, assuming there were such a relationship, you could use it to adjust exposure time and indicated value in synch. I did this many years ago and have forgotten the results. But I would guess there is going to be too much noise in the data to find a relationship.

Desirable houses sell fast and often at sometimes inflated values due to bidding wars and/or waiting lists. Hard to sell homes take longer to sell. Then of course it depends on what the seller is willing to sell for.

So, my gosh, it doesn't hurt to try, but you are probably wasting your time in a lot of markets where Demand exceeds Supply. The simple approach is to use the average and/or median DOM for sales in the past 3-6 months as the exposure time.

This thread is particularly interesting now with respect to Marketing Time - because we are headed in a new direction in many market areas, with interest rates that are expected to keep increasing. You can predict Marketing Time under certain assumptions, such as assuming that recent rates of change will continue. Beyond that, you get into speculation that is most likely risky.

 

[J Grant]

If you're already bored with the topic then feel free to swipe left and keep it moving.

First of all, what's the difference between these two concepts in appraisal parlance? Here's the graphic I always used to explain that:

<---Exposure Time----------Effective Date---------Marketing Time---->​

Relative to the effective date, the concept of exposure time is the look back at the length of time it would have taken to expose this property well enough to result in the sale between buyer and seller. It's a retrospective for which we already have the historical data in hand that it takes to develop. We know what the market conditions have been for the last year, we can see how long it took for each of our comparables to go under contract. We can interpolate that data and work within the confines of those ranges. An opinion of exposure time can thus be characterized to be reasonable/unreasonable to the same extent as the value conclusions themselves.

Marketing time is something different. The number of days for marketing time vs exposure time can be the same at any given effective date but the concepts and meanings are different. Relative to the effective date, marketing time is a look forward into the future. A projection. We cannot "know" how long it will take our active listing comps to result in the sales contract. We can only project the past into the future expectation, basically an extrapolation.

Imo, the distinct difference for appraisers ( besides the fact that exposure time is retrospective - ) The difference in the way appraisers analyze it vs RE agents /the public is that for appraisal purpose, the appraiser estimates the exposure time as the length of time it would have taken to get a sale between buyer and seller at a market value price at market value terms. And the same applies going forward for an estimate of future marketing time to achieve a sale price at market value with a transaction at MV terms.

Whereas the RE agents and public sees marketing time as the estimated length of time to get a "good price" , or an offer, for the subject.

I used market value in above but it could be whatever type of value is identified in the assignment - the exposure estimate for liquidation value would be different than for market value ( typically).

PS see Water cooler for thanks for your free JGrant thread

 

[J Grant]

Without JG this thread is going to be no fun.

But



<---Exposure Time----------Effective Date---------Marketing Time---->

Reminds me -
Past (historical) time = Sales Approach
Today's "here, now, today" time = Cost Approach
Tomorrow's "anticipation of future benefit" = Income Approach

Ha ha I am back to torture everyone !!

 

[glenn walker]

Ha ha I am back to torture everyone !!

God I knew you were lurking on here when I saw the save Grant thread had been shut down for futher comments a few days back. That why I posted earlier about you and Price"V" Value as I knew it would get you going LMAO