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Exposure Time

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The entire USPAP needs to be flushed and rewriten in a one page format. They have taken the fairly non complex, logical and common sense concept of appraising and complicated it to the extent that no one knows whats going on. Tell me what other industry has so many stupid rules that make absolutly no sense or are basic common sense, but they require you to make a statement about it. The US tax code will be easier to comprehend than USPAP in a few years. My wife is a CPA and she does not have to follow nearly as many "gotcha" rules as appraisers. I bet that someone could review 1000 of any appraiser's work and 999 of them would have at least one USPAP violation if they looked hard enough. USPAP has become a joke.
 
I just finished the new USPAP update course and I will have to admit it is a bit confusing. Based on the quoted statement below you establish(predict) the marketing time after you inspect the property (Effective Date) as a result of your statistical analysis. This would be realistic for a refi but with a sale a certain amount of marketing time has already occurred BEFORE you inspect the property. I assume they want you to match your PREDICTION to what ACTUALLY occurred?

“exposure time occurs before the effective date of the appraisal, whereas marketing
time occurs after the effective date. “

Marketing Time:

Lets say a house was realistically listed for 30 days at $325,000 and it sold after 10 days for $300,000. Closing is to occur on the 20th day. You inspect the property (Effective Date) 12 days after it was listed. Marketing time is thus 30 – 12 = 18 days (according to USPAP); although, actual marketing time was 30 days from listing date to closing and not the day you inspected it.

Exposure Time:

Lets take the same house as an example. Suppose the house was listed for $500,000 six months before. After having been reduced a number of times to $325,000, it sold for the amount stated above ($300,000). According to the USPAP definition, exposure time would be 5 months plus the 12 days (Effective Date) of the appraisal. If this was for a refi why would you state that it should be listed for $500,000 ,on an exposure time basis, when in actual fact $300,000 to $325,000 would have been a more realistic estimate. Why not just state your estimated marketing time and disregard the unrealistic exposure time? The only other comment you could make is that exposure time equals marketing time. In addition if it was for a refi, why would you infer that it may take a number of marketing time segemnts to sell the house at certain price levels? These segments and price levels may be extended over a number of months or even years.Would this be your basis for exposure time? Your estimate for marketing time would be more realistic. Estimating exposure time would be very unrealistic unless you could match it with an estimate of marketing time.
 
Why do folks make this so difficult? It ain't rocket science. How long would the subject typically have to be on the market to sell at your value opinion? This would assume appropriate pricing to sell in the same amount of time as other similar properties sold, when they were priced appropriately.
 
Mr. Rex:

Please stop trying to simplify things. If they stay complicated we can keep the AMC's fees in the $200 range rather than having them drop below that. They will thing we need to be really smart to do our work.

Work with us here. Ha-Ha-Ha. Time for a drink.
 
The entire USPAP needs to be flushed and rewriten in a one page format.
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amen bro. dave ...the whole issue is piffle because it does not make a hooey and a half hitch. Name one instant where the difference in "Marketing Time" and "Exposure Time" ever caused you to alter your opinion of market value.

scope creep.
Click to expand...
exactly.

History does not necessarily repeat itself thus expounding on the same in a report is a waste of breath. To carry PEs argument further about the difference before and after 9/11....

So say you appraised a property with an exposure time of 6 months... You inspect at 8 am, and at 1 pm, a terrorist successfully ignites a small nuclear bomb in NYC...You complete the report at 5 pm...Your history just got thrown out the window but wait..wait...you inspected it BEFORE the bomb went off (so we still use 6 months???)..and wait again. Are you smart enough to know whether panic will subside in 3 weeks? 6 months? 10 years? Will sellers panic drop the price and beg for quick sales? or will sales stop? Will lenders lend?...who knows?

Rumsfeldt caught bloody L ridicule for talking about the "known unknowns" and the "unknown unknowns" but that is precisely the issue and military men have talked about it for ages in exactly those terms. We really cannot see beyond the moment and it is our great hubrus to think we can.

Exposure time is asinine on the face of it because many, if not most, of our assignments are for property that isn't even on the market let alone going to sell on the day we appraise it. Therefore, we are basically saying we are appraising it as is with furniture in the house, a dog in the kennel, and food on the stove....and, that ain't happening...ain't gonna happen.

"Marketing Time" "Exposure Time" ought to be simplified to simply report what the statisical average of our sales are. If we have 10 comparables and they averaged 105 days on market, then that ought be be placed in the report as "days on market" and keep our trap shut about theoretical "marketing times". MV definitons should only aver that the value is based upon the typical days on market of similar sold properties within the defined neighborhood and sales parameters used in the SOW.

All this data is past history -it is a known known. The future is an unknown unknown...we only fool ourselves into thinking we can predict a known unknown...
 
You guys act as if all appraising is limited to hacking out URARs on SFRs and that concepts don't matter. Neither is the case. And regardless of the fact that in most cases the two "times" will be the same they do represent different concepts nonetheless. One of them is an explicit assumption in the definition of MV we're using and the other isn't. That's another distinction.

Terrel's example for the bomb is misstated. It's not a question about what happened after the effective date but what happened the day before. The comps all closed prior to that day but something happened between then and when this house could be expected to close. Same with an auto plant closing or the prevailing financing terms changing (like interest rates going up). The market isn't static and upon occasion what happened before Bear Stearns went under might affect what happens immediately afterward.

The other thing about this is that the definition of MV you have all been using is predicated on a stated hypothetical sale closing as of the effective date. The definition itself already includes that assumption - we are not reading anything else into it.
 
knadave said:
The entire USPAP needs to be flushed and rewriten in a one page format. They have taken the fairly non complex, logical and common sense concept of appraising and complicated it to the extent that no one knows whats going on. Tell me what other industry has so many stupid rules that make absolutly no sense or are basic common sense, but they require you to make a statement about it. The US tax code will be easier to comprehend than USPAP in a few years. My wife is a CPA and she does not have to follow nearly as many "gotcha" rules as appraisers. I bet that someone could review 1000 of any appraiser's work and 999 of them would have at least one USPAP violation if they looked hard enough. USPAP has become a joke.
Click to expand...

Another nomination for best post of the year.
 
BTW, anyone who thinks 999 out of 1000 appraisals has USPAP "violations" doesn't get out much and is underinformed. I've read lots of USAPAP compliant appraisal reports.

My advice is to stop being paranoid and do some reading for yourselves. SR-3 ends on page 38. It's not too much material to at least try to understand.
 
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