Marketing Time ... Exposure time

[Charlotte Dixon]

I know this is very elementary, but I have new software and in one section of the FIREA form there is a place for:
Marketing Time/Exposure Time

I certainly know what Marketing Time is, but is Exposure Time the same?
Couldn't find an exact definition of Exposure Time in my library. Thanks.
Charlotte

 

[Ray Ohler]

Nope. May be the same "period" or amount of time but different definition. "Under Item 3 of the recited definition of market value, the value opinion presumed that a reasonable time is allowed for exposure in the open market. According to the Statement of Appraisal Standards #6 issued by the Appraisal Foundation, exposure time was defined as the estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at the market value on the effective date of the appraisal. It was a retrospective estimate based upon an analysis of past events assuming a competitive and open market. Thus, exposure time was presumed to precede the effective date of the appraisal. Based upon the analysis detailed in this report, the appraiser estimated a reasonable exposure time to be about "X" to "X" months for the subject property at the opinion of market value reported herein."

I read this, it's early, I don't think there are any spelling errors but there could very well be. I haven't had coffee yet. Hope this helps.

 

[Pamela Crowley (Florida)]

Ray is correct I believe. The difference between the two has to do with changing markets, such as the potential effects of 9/11 and/or the recession. They are asking for the appraisal as of the effective date. Exposure time is your estimate of how long it would have been on the market to bring your opinion of the market value. Market time is you estimate of how long it will have to be on the market from this date forward to bring this price.

Jump in everyone and correct me if I'm wrong :!:

 

[Charlotte Dixon]

Thank you so much for the quick response....Appreciate it much! Charlotte

 

[Richard Carlsen]

Ray and Pam seem to be right on the money. And Ray can really think without coffee!
Glory be!!

I remember being told some years ago that exposure time and market time were generally the same time except in a changing market where in an up market (sellers market) would normally have less market than exposure and in a down market (buyers market) it would normally be the opposite. A stable market usually finds them about the same.

 

[George Hatch]

All of the above responses are correct. The easiest way I have seen to explain this difference is to use the following visual:


<------ Exposure Time (X) Marketing Time ----->

(X) = date of the valuation.


In other words, Exposure time is a look backwards as of the effective date of the valuation. The easiest way to determine it is to look at your comparable sales. Exposure Time estimates are a binding requirement in USPAP, and should best be expressed in the Reconciliation of Value.

Marketing Time is a forecast into the future as of the effective date of the appraisal, it's what might happen. The best way to make it is to examine the past and present, and go with your gut. Since there is no way to foretell the future, Marketing Time is not a binding requirement in USPAP, but rather a supplemental standard often asked for by clients.

In most cases for most properties, exposure time for most properties, marketing time and exposure time will generally be similar at any given time, except when the market experiences either a boom or a bust, sometimes attributable to a single event.

Whe it comes to explaining this to clients who usually don't really care anyway (they're just checking off a box on their review), the easiest way to handle this is to lump the two together in your report, like:

"This appraisal is based on an estimated Exposure Time/Marketing Time of 3-6 months", or words to that effect. I do this either in the Reconciliation or the Comments section, and anywhere else I express the value opinion in the report.

Of course, if you feel that there would be different estimates for the two, you should break them up and express them separately.

Hope this helps

 

[Dan Leggett]

<------ Exposure Time (X) Marketing Time ----->

(X) = date of the valuation.

That's the way I learned it in AI's Standards of Professional Practice, Course 430 last fall.

 

[John SRA]

Charlotte,

Here is a simple explanation that I picked up in a USPAP class a few years ago. The difference between exposure time and marketing time can be understood by considering two questions.

1) How long ago should a property have been listed for sale for one to reasonably expect it would have sold by the appraisal date?

The answer to this question is the exposure time.

2) If I list the property for sale on the appraisal date, how long can I reasonably expect it to be on the market before it sells?

The answer to this question is marketing time.

As others have pointed out, in a stable market the answers are likely to be very similar. However, in a changing market the answers could be VERY different.

Best Wishes

JC

 

[Austin]

I agree with all of the above, but something related happened to me about 15 years ago. I was doing relocation appraisals for a relocation company. I did a number of appraisals for them and one day I got a report card in the mail from them. They said I had a 94% rating meaning that my appraisals were on average 6% below actual sale price. My thought was, "what the devil does that have to do with anything?" The reason I thought that was the very reasons given above. The question I answered was; "What would the subject sell for with the normal exposure time prior to date of appraisal," and not: "What do you think it will sell for in the next six months marketing time." Two completely different questions in my book and their report card was completely off the wall. Then too, I gave them a target or goal to shoot at and without my target price, they would not have known how to price the property. I did an appraisal on a property once for an estate. About three years later I met one of the family members on the street and she said: “You are not so smart because we got $4,000 more than you appraised our property for.” I said, “How long was it on the market?” She said: “Three years.” I said, “I guess you are right, I am not to smart.” :lol: