Exposure time vs marketing time, just for fun

[George Hatch]

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.

 

[George Hatch]

Now to step back and look at the why. Not all definitions of value we use include the explicit assumption of exposure time, but some of them do. The definition of MV we use for most of our mortgage lending assignments being one of them:



So that's an example of the usage of "reasonable" exposure time. But "reasonable" isn't the only metric that appraisers might be tasked to use. There are other definitions we can run into that use different assumptions WRT exposure time:

https://www.appraisalinstitute.org/assets/1/7/guide-note-11.pdf

In this manner we can see that the requirements for appraisers to develop an opinion of exposure time when using certain definitions of value isn't just a formality or an arbitrary impediment being imposed on some of you Tier-1 High Speed/Low Drag Appraisal Operators to slow you down. The point at hand here is that although the numbers may be the same, readers may consider those numbers to mean something different to them depending on the context they draw from the stated opinion of exposure time:

• 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.

Thoughts, opinions, disagreements encouraged.

 

[Mark K]

Now to step back and look at the why

Why? As in 'why bother'? Since my crystal ball went on the fritz years ago, my marketing time always equals my exposure time.

Another question...

Does anyone let the numbers affect their appraised value?

 

[George Hatch]

Glad you asked, and sure, the two numbers will usually be the same. But not always. We just saw what happened when the interest rates spiked. Subsequent DOMs changed; the after was a little different than the before.

Bear in mind that the effective dates we use aren't *always* in the here and now. We can get involved with Retrospective Value Conclusions where we can see that the exposure time as of the morning of the earthquake could have been different than the marketing time later that day after the earthquake occurred. That's an extreme illustration but it serves the purpose of explanation.

For the most part, exposure time will be an element of the analyses in almost all of these mortgage lending assignments, but marketing time will usually be a client-driven extra. In most of my own assignments I add market time as an extra of my own volition and out of habit, not because my clients are requiring it.

As for

Does anyone let the numbers affect their appraised value?​

I would suggest that number isn't the only relevant piece of info in the appraisal report. If you're a user and most other appraisals you're seeing have an exposure time of 10-15 days but THIS appraisal concludes to a much longer time frame because the property is a wierdo or has limited market appeal or whatnot then that could affect your decision making.

 

[Fernando]

Exposure time and marketing time is confusing to the public.
The term Exposure sounds like it's exposed but not actively advertise to the whole market.
Marketing time is period when agent/seller is 100% in it to try to sell their property to the public. USPAP may need to change these terms.

 

[glenn walker]

Exposure time and marketing time is confusing to the public.
The term Exposure sounds like it's exposed but not actively advertise to the whole market.
Marketing time is period when agent/seller is 100% in it to try to sell their property to the public. USPAP may need to change these terms.

** What Part of This Do You Not Understand ? It was not created for the public but for the appraiser to create credible report . Uniform Standards of Professional Appraisal Practice (USPAP) defines “exposure time” as the: estimated length of time that the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal.

 

[Fernando]

** What Part of This Do You Not Understand ? It was not created for the public but for the appraiser to create credible report . Uniform Standards of Professional Appraisal Practice (USPAP) defines “exposure time” as the: estimated length of time that the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal.

I don't know why some appraisers can't have an open mind and see flaws in USPAP. Why create terms just for appraisers and yet confusing for the consumer.
Oh yes, so the USPAP can continue evolving in collecting their cartel fees from us.

 

[The Bob]

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.

 

[Fernando]

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.

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

 

[glenn walker]

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.

I agree and in reality exposure time in residential is most often equal or similar to Days on Market ( DOM ) BUT in Commercial it can come into play as many properties take years to market and sell rather than days. As far as the public they really don't pay attention to anything but days on market. USPAP is written to cover all types of real estate appraisals so again Exposure Time has way more relevance in some Commercial or Rural transactions then typical residential transactions that most loan production appraisers do for a living.