Please help me understand

[Atlanta CG]

Why is it I can understand so much about this business but cannot seem to grasp some easy concepts?
I know the technical definition of exposure & marketing times. But I cannot seem to get it through my thick skull the true difference - can someone give me an example?
If I find sales in a neighborhood that in general have been on the market for 6 months before pending, doesn't that say that the marketing time has to be 6 months as well in order to sell? So, in the absence of a major catastrophe where the market absolutely falls apart, aren't these two time periods going to be the same? I know the economy has created long marketing periods to sell a home - how can you prove that unless the exposure times exceed long periods as well? And, that needs to occur before it is proven. Sort of like begging the question, I think.
Need an example to understand it, I think, and would be supremely appreciative.

 

[CANative]

Exposure time is looking back. Historical. Inferred analysis.

Marketing time is looking forward. A forecast.

 

[Avenash Singh]

I know the economy has created long marketing periods to sell a home - how can you prove that unless the exposure times exceed long periods as well? And, that needs to occur before it is proven. Sort of like begging the question, I think.
Need an example to understand it, I think, and would be supremely appreciative.

One thing that's helpful to me, and it depends on how malleable your local MLS is, is pulling all relevant sales in an area for the amount of time I'm interested in, sorting by month, and then comparing the active days on market and days to contract fields in chronological order.

With enough data, having excel average the days on market each month for the last year or so will help you identify significant trends, if present.

 

[Rich Heyn]

Q: How much is this property worth?

A: I dunno, maybe $200,000

Q: What if I only have 7 days to expose it to the market?

A: Oh, well, I guess a lot less than $200,000.


Exposure time and market value are linked. The appraiser's opinion of market value is based on a given exposure time. It's a hypothetical; how long the appraiser estimates the property would need to have been offered prior to the effective date to fetch a given amount. Exposure time is always a development requirement in a market value appraisal. It's not always a reporting requirement.

Marketing time is the amount of time it might take to sell a property after the effective date.

If you have the 2008 USPAP, look up Exposure Time in the index and you will find several good references. Check out FAQ 102.

 

[Ken B]

Deleted previous posting.

Reading Rich's definition answers a question in my mind about the difference between the two periods and infers that my previous understanding may not have been totally correct.

Now, how come nobody else could so simply explain it?

 

[PropertyEconomics]

Many question who cares how long it would have had to been exposed ... it may nor may not have been. Why is the exposure time is even relevant to valuation?
If its for a refinance it was not exposed to the market but the comparables were.
Forecasting marketing time, is looking forward and relevant to the value of the property, but is exposure time relevant since its looking backward from a point in time value of today?

 

[CANative]

My post is essentially the same as Rich's post. I even added an example like his but deleted it. I thought it was too basic.

 

[Nancy in Friday Harbor]

I understand the difference, but have, in the past, had trouble remembering which term referred to which period. Ok...made up word game.

"E" comes before "M".
Ergo, Exposure is before the effective date....Marketing is after.

I seem to need to operate on the KISS system as I age <VBG>.


Nancy is sunny, but chilly Friday Harbor

 

[Rich Heyn]

Why is the exposure time is even relevant to valuation?

It may not be relevant to all types of valuation but it's relevant to opinions of market value. A market value opinion takes place within the context of exposure time because definitions of market value specify applicable conditions. One of the conditions specified in most such definitions is a "reasonable" exposure time.

 

[Webbed Feet]

Mr. Marshall,

Thank you for the good question!

Webbed.