Days On Market Vs. Exposure Time

[George Hatch]

Andrew,

If i were a lender, I would prefer an estimation of marketing time derived from what the market might perform like in 1-2 years, considering it is much more likely for the lender to have to sell the property within 1-2 years than the unlikely situation that the borrower does walk out the door and is immediately hit by a bus. Why don't they define marketing time as 1-2 years instead of the day right after?

I'm sure they would if they could. While they're at it, I'm sure they would like us to warranty our opinions on the property values and market conditions as well as the underwrite their loans for them so they would never have to take any risks; if only they could. That way, if a property ever went down and they ever lost money on it, they could come after us for the difference. But they can't. So far....

Risks are part of the game and they serve to justify the rewards. That's why they make the big bucks. We have enough uncertainty in our line of work. We don't need to volunteer for more.

 

[Andrew Walker]

Originally posted by George Hatch@Dec 16 2003, 07:23 PM
Andrew,

If i were a lender, I would prefer an estimation of marketing time derived from what the market might perform like in 1-2 years, considering it is much more likely for the lender to have to sell the property within 1-2 years than the unlikely situation that the borrower does walk out the door and is immediately hit by a bus. Why don't they define marketing time as 1-2 years instead of the day right after?

I'm sure they would if they could. While they're at it, I'm sure they would like us to warranty our opinions on the property values and market conditions as well as the underwrite their loans for them so they would never have to take any risks; if only they could. That way, if a property ever went down and they ever lost money on it, they could come after us for the difference. But they can't. So far....

Risks are part of the game and they serve to justify the rewards. That's why they make the big bucks. We have enough uncertainty in our line of work. We don't need to volunteer for more.

I completely understand, I just think that our line of work is to provide our best opinion, one that cannot be litigated against unless we do something that warrants it by violating any of the rules and regulations that we are bound to follow.

Our estimation of value works in this way and they certainly can't take the difference from us if the house sells under our estimation (unless we mess up as described above), so I would think that an analysis of marketing time in 1-2 years wouldn't be much different as far as this is concerned.

As an appraiser (trainee...<cough>) its a bit more work, so I'm not ecstatic about it, but if I were a lender, I would request an appraisers estimation of marketing time a little more down the road than the day after.

Just further explaining my thought. Comments, ideas, etc. welcome!

Thanks for the input,

Andrew

 

[Farm Gal]

Originally posted by George Hatch@Dec 16 2003, 06:11 PM
Lee Ann,

I'm not entirely sure I'm following your question.
...{snip}...
I'm guessing that you're asking about it because you already make the separate estimate and you're assuming everyone else does, too. Either that, or I really am missing your question. You'll have to correct me if I'm wrong. Feel free to slap me around a little if that's the case. Alls I can do is apologize in advance.

:redface:
eerrrrr George, thanks for the comprehensive response... I missed some of the posts about the KY board and this matter, and hadn't done my homework. between your answer and a quick search I be up to speed now! B)

Yes in fact I do make the neighborhood comments, and then comment specifically about my subject ET/MT ... unlike you I do typically both, as we have in most years had some seasonal marketing differences which I process specific to the subject in some of my boiler plate.

It tends to add support for my other comments when I am willing to gaze into my crystal ball and tell them what I think is gonna happen to the subject were it placed on the market tomorrow as a new offering: due to the increasing oddity of the ones I get to look at (no more fish in the barrel appraisals round here!) it is an interesting exercise, and I find that it adds focus to my 'value as of effective date' analysis.

Particularly on high end slightly oversupplied stuff I feel as though I am telling the 'rest of the story'.

I guess you nailed it: I ASSumed most folks performed the same level of analysis and reporting.

I know some of my local formfilling competition doesn't but have found similar analysis in the reports of most of those I consider peer level competition. Guess I oughtta quit grousing about the competition, hunh?

 

[George Hatch]

unlike you I do typically both, as we have in most years had some seasonal marketing differences which I process specific to the subject in some of my boiler plate.

Ah, yes. Seasonal differences would have an impact in some markets. That one never entered my mind. Can you say "geocentric"? Guilty as charged. See how our experiences can be shaped by our environmental elements? Even one so "common" as weather and seasons. Thanks, now I have another angle to examine from and explain with.

 

[OCApp]

even after 20 years of appraising, i get exposure and marketing time mixed up and generally substitute one for the other. on most relo appraisals i do, they typically want you to value based on a 90 to 120 day exposure/marketing time. in other words, what would the property sell for if exposed to the market for 90 to 120 days.

in orange county, ca. i've never seen inventory levels so low. so if a property comes on the market and it's priced within reason, it can be expected to sell in a matter of days.

very difficult to do RELO appraisals out here now.

 

[Nancy in Friday Harbor]

Paul, I still mix them up too.....
Just take a deep breath and remember that "E" comes before "M".

 

[Pam Wyant]

Sadly, it's typical for a board to go after an appraiser for violating USPAP by forgetting to put in an exposure time, but ignore the value that is a third more than the property is worth.