Reasonable Exposure Time

[Pittsburgh Pete]

USPAP
ETHICS RULE
MANAGEMENT
PAGE U-8.

But what on God's green earth does that have to do with reporting a reduced marketing/exposure time for a property? If a client wants the property valued with a 30-day marketing period, you appraise the property with that criteria. I think you must be "loosing" your mind!

 

[George Hatch]

A value to sell faster than market typical is a direction that favors the client.

First of all, lets ditch the nomenclature for a moment go back and review the actions of the individual and the expectations of the users.

- the client isn't always the only intended user, and indeed a request for an opinion of liquidation value or disposition value doesn't always come from a lender. So in theory a borrower obtaining such a value opinion for a lender's use might not be getting an opinion that meshes with their own desired outcome.

- If the users are expecting the equivalent of some form of a liquidation value complete with the *element* (assumption being a poor choice of terms on my part) of a motivated seller and abbreviated exposure time then it's not at all unreasonable for an appraiser to answer that question.

- What's unreasonable is referring to it as something it isn't - which in the case described is occurring at the client level. It's no different than if the client asked you for an opinion of a property that's actually in poor condition as if in average condition - you absolutely can answer that question so long as you disclose what you're doing.

IMO

 

[Meandering]

First of all, lets ditch the nomenclature for a moment go back and review the actions of the individual and the expectations of the users.

- the client isn't always the only intended user, and indeed a request for an opinion of liquidation value or disposition value doesn't always come from a lender. So in theory a borrower obtaining such a value opinion for a lender's use might not be getting an opinion that meshes with their own desired outcome.

- If the users are expecting the equivalent of some form of a liquidation value complete with the *element* (assumption being a poor choice of terms on my part) of a motivated seller and abbreviated exposure time then it's not at all unreasonable for an appraiser to answer that question.

There is no borrower for an REO assignment.

- What's unreasonable is referring to it as something it isn't - which in the case described is occurring at the client level. It's no different than if the client asked you for an opinion of a property that's actually in poor condition as if in average condition - you absolutely can answer that question so long as you disclose what you're doing.

I do not disagree. I'm pointing out that the pre-printed form calls it something it isn't, and while we can always narrate what we are opining is in contrast to what is pre-printed on the form, we just wind up with the same head banger argument of providing conflicting information due to the pre-printed form.

But what on God's green earth does that have to do with reporting a reduced marketing/exposure time for a property? If a client wants the property valued with a 30-day marketing period, you appraise the property with that criteria. I think you must be "loosing" your mind!

Obviously you did not read all the posts,
Make it easy for you, cite the USPAP term for a client mandated 30-day marketing period.

Nothing to think about Pete, just cite the USPAP term and definition that allows the client to mandate the marketing period.

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[LordofTexas]

Thought I just said that.

Yeah, but come on, Mike copied and pasted the actual FAQ number. That's like you saying the bluebonnets are pretty verses Mike saying the Lupinus texensis around the hills and valleys of Fort Worth are exceptional this time of year.

I think most just post before reading all the responses. But, I'll give you props; you did.

 

[J Grant]

There is nothing in USPAP that prevents a client from mandating a certain time frame as marketing period as an assignment element. The appraiser should disclose it and how it affects value. LV, DV, are variations of market value, however market value with a restricted market exposure/marketing time. I think GH had a good solution since it is a pre printed form, explain that due to market exposure it might be closer to LV or DV...but imo, it is not exactly that either, and rarely does a client limited DOM approach LV, where it is a severely limited advertising effort AND specified the sale must consummate (close) within the marketing time period, as opposed to a limited marketing time period where the sale is not specified to close within that time frame ( and the property is still listed on MLS, not a severely limited advertising/marketing effort)me.

 

[Pittsburgh Pete]

Me thinks someone needs to bone up on USPAP.

 

[Meandering]

There is nothing in USPAP that prevents a client from mandating a certain time frame as marketing period as an assignment element. The appraiser should disclose it and how it affects value. LV, DV, are variations of market value, however market value with a restricted market exposure/marketing time. I think GH had a good solution since it is a pre printed form, explain that due to market exposure it might be closer to LV or DV...but imo, it is not exactly that either, and rarely does a client limited DOM approach LV, where it is a severely limited advertising effort AND specified the sale must consummate (close) within the marketing time period, as opposed to a limited marketing time period where the sale is not specified to close within that time frame ( and the property is still listed on MLS, not a severely limited advertising/marketing effort)me.

J
Read the definitions in USPAP. All the time frames are your opinion based on your value. And the time frames do not inhibit the value.

Honestly you can't make this stuff up.

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[Pittsburgh Pete]

Now I know someone has to bone up on USPAP.

 

[Terrel L. Shields]

MT is one thing.... but exposure time? Really. If the notion is that a particular property has a particular period of time that it will sit on the market at a "Market Value" price....then count me skeptic # 1. Think back at homes that languish on the market for months, sell and then the next time they are marketed they sell in 30 days or so...both being "arm's length" and no indication that the price is not "market value". The idea that you will find a home in an inefficient market, priced subject to an offer, against a flux of ever changing competitors, under changing economic conditions, with a series of different potential buyers and, despite all, expect the period of time that the property will sit before selling to remain consistent or be, in any way, predictable, is nonsense. To suggest that the "exposure time" can be any more or less precisely determined that that of "market time" seems to be rather meaningless. I watched a home take 3 years to sell, and when it resold 18 months later - stigmatized by a murder in the house - it sold within days for more than the original sales price despite being vacant for a year before being put on the market. What does that tell me? That the EXT and MKT could be chosen with a dart board with the same amount of precision.

 

[George Hatch]

Probability based on the trends demonstrated by the comps? I don't see any difference between opining exposure time based on the demonstrated trends vs opining the price itself.

Some properties sell higher, some sell lower, some sell quicker and some sell slower. We're still looking for the trends as demonstrated by the group, though.