Reasonable Exposure Time

[Greg Parker]

"My opinion of a reasonable exposure time....."

Synopsis. The marketing time for a subject property I am working on (REO property) is slightly over 120 days at the median level. 14 comparable sales, tract development, all 95-169 DOM.

Since this is REO, client asks for a restricted value considering a 90 day time in addition to market value.

Reasonable exposure time for the as-is market value is going to fall into the 90-180 day category (rounding), explained on my report. I am being dinged by a reviewer because they are saying that my opinion of a reasonable marketing time should match the clients restricted marketing time.

I have not run into this request before. I always give the market times, and address their secondary value request on the REO addendum with commentary if there is a variance from what the market information shows. In this case, since there is a gap with the client asking for a shorter period and value opinion to comply, I have commented on the REO form addendum.

Am I missing something here, and reporting this incorrectly? Restricted does not equal reasonable in my mind, but I am glad to be educated if I'm missing something.

 

[hastalavista]

I'm having some difficulty following exactly what the issue is (other than the client's 90-day imposed exposure time).

Are you saying that the client wants you to provide an opinion of value with a client-imposed 90-day exposure time?
Ok, if that 90-days is something less than the market, then the opinion of value you are going to provide is something other than market.

Is the issue that the client wants an opinion of market value with a 90-day exposure time when the market value requires 120-day exposure time (or, at least 95 days)?
In other words, the client is asking you to provide an opinion of market value using a non-market based exposure time?

 

[Greg Parker]

I am really beat, and not expressing myself properly. Sorry.

The client wants me to change my opinion of exposure time to 90 days. Not my value... they appear satisfied with that aspect. Specifically change "my reasonable opinion of exposure time". In my report, I have differentiated between what reasonable exposure time is based on market analysis, and commented that the client asks for a value considering a restricted marketing time of 90 days.

 

[hastalavista]

I am really beat, and not expressing myself properly. Sorry.

The client wants me to change my opinion of exposure time to 90 days. Not my value... they appear satisfied with that aspect. Specifically change "my reasonable opinion of exposure time". In my report, I have differentiated between what reasonable exposure time is based on market analysis, and commented that the client asks for a value considering a restricted marketing time of 90 days.

I know what it is like to feel drained right now!

Ok; well, I think you have a legitimate issue here.
The client can have your opinion of value with a reasonable estimate of exposure time, and if everything else is consistent with the definition of market value, then that opinion is "market value".
Or, the client can have their restricted marketing time; if that marketing time is less than market then, by definition, it is something other than "market value".
How to best convey that concept to your client, I'll leave to you. But, I think a workable way is what you already alluded to: the REO addendum gives us the form-structure to do this. But you don't need the REO addendum to give a value opinion other than market value. See if they'll accept a short narration of the impact on value of a shortened (restricted) exposure time... call it liquidation value (if you like) but the difference between "Market Value" and what they want is the exposure time; all the other elements remain the same.

Good luck!

 

[J Grant]

?? Usually on an REO appraisal there are two values, the first value opinion is on the URAR page in reasonable exposure time ( you choose that based on judgment of market), the second value opinion is on the REO addendum page with client imposed marketing time ( 60-90 days, or whatever they specify)

 

[Meandering]

I am really beat, and not expressing myself properly. Sorry.

The client wants me to change my opinion of exposure time to 90 days. Not my value... they appear satisfied with that aspect. Specifically change "my reasonable opinion of exposure time". In my report, I have differentiated between what reasonable exposure time is based on market analysis, and commented that the client asks for a value considering a restricted marketing time of 90 days.

include the USPAP definitions:

EXPOSURE TIME: 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. Comment: Exposure time is a retrospective opinion based on an analysis of past events assuming a competitive and open market.

The reasonable marketing time is an opinion of the amount of time it might take to sell a real or personal
property interest at the concluded market value level during the period immediately after the effective date of an appraisal. Marketing time differs from exposure time, which is always presumed to precede the effective date of an appraisal.

The development of a marketing time opinion uses some of the same data analyzed in the process of developing a reasonable exposure time opinion as part of the appraisal process and is not intended to be a prediction of a date of sale or a one-line statement. It is an integral part of the analyses conducted during the appraisal assignment. The opinion may be a range and can be based on one or more of the following:

Sorry, there is no USPAP definition for a client dictated marketing time that applies to market value.

Try again.



.

 

[Mike Kennedy]

"My opinion of a reasonable exposure time....."

Synopsis. The marketing time for a subject property I am working on (REO property) is slightly over 120 days at the median level. 14 comparable sales, tract development, all 95-169 DOM.

Since this is REO, client asks for a restricted value considering a 90 day time in addition to market value.

Reasonable exposure time for the as-is market value is going to fall into the 90-180 day category (rounding), explained on my report. I am being dinged by a reviewer because they are saying that my opinion of a reasonable marketing time should match the clients restricted marketing time.

I have not run into this request before. I always give the market times, and address their secondary value request on the REO addendum with commentary if there is a variance from what the market information shows. In this case, since there is a gap with the client asking for a shorter period and value opinion to comply, I have commented on the REO form addendum.

Am I missing something here, and reporting this incorrectly? Restricted does not equal reasonable in my mind, but I am glad to be educated if I'm missing something.

"FAQ
138. EXPOSURE TIME AND MARKETING TIME
Question: What is the difference between exposure time and marketing time?
Response: As defined in STATEMENT No. 6, Reasonable Exposure Time in Real Property and Personal Property Market Value Opinions exposure time is:

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 market value
on the effective date of the appraisal; a retrospective opinion based on an analysis of
past events assuming a competitive and open market.

In contrast, Advisory Opinion 7, Marketing Time Opinions defines marketing time as:
an opinion of the amount of time it might take to sell a real or personal property interest
at the concluded market value level during the period immediately after the effective date
of an appraisal.

In other words, exposure time occurs before the effective date of the appraisal, whereas marketing time occurs after the effective date.

An estimate of exposure time is required by USPAP for market value appraisal assignments (see Standards Rules 1-2(c)(iv) and 7-2(c)(iv)), whereas an estimate of marketing time is not mandated by USPAP (but may be required by the client and so become assignment conditions in those assignments). For additional guidance, see SMT-6 and AO-7.

An estimate of exposure time is required by USPAP 2014-15 for market value appraisal assignments (see Standards Rules 1-2(c)(iv) and 7-2(c)(iv))

EXPOSURE TIME:
Defined 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."
Exposure time is always presumed to precede the effective date of the appraisal. It is the estimated length of time the property would have been offered on the market, prior to the hypothetical sale, at the appraised value, on the effective date of the appraisal. It is a retrospective estimate based on an analysis of past events assuming a competitive and open market. This includes not only adequate, sufficient and reasonable time, but adequate, sufficient and reasonable effort. It is often expressed as a range and is based on the following:
1. Statistical information about DOM (most commonly obtained from the local MLS).
2. Information gathered through sales verification.
3. Interviews with market participants.
Based upon historical market conditions, reasonable exposure time for the subject property would have been approximately XX to XX days. This is based on the analysis of current market trends within the subject's sub-market, seasonal considerations and takes into account the size, condition, list price and price ranges of the subject property and surrounding area. It also assumes professional (proactive) marketing by reputable local real estate offices."

 

[Meandering]

Thought I just said that.

 

[TRESinc]

Thought I just said that.

mike hasn't copy/pasted anything in a while. he needed a fix.

 

[Greg Parker]

Thanks for the clarification on Exposure vs. Marketing.

There are no value issues addressed. They seem satisfied with those. The reviewer is going down two different paths from what can tell. He is asking why my exposure time does not match the client imposed marketing time (and I am not mixing up the two there, this was a direct question from his email)

Where the underwriter/reviewer seems to be giving me guff is on my exposure time statement. The statement, not the value or dollar related issues.

I have reported the typical market exposure time for a home in as-is condition based on the market information, and there is wording in the REO addendum specifically addressing the client desire for a restricted marketing time.

Marion hit the nail on the head, but I think I will behave and leave out the Sorry, try again part!

Thanks again guys.