Download Making Sense of Marketing Time and Exposure Time Lee Ovington

Making Sense of Marketing Time and Exposure Time
Lee Ovington, MAI, SRA
Marketing Time
Strangely enough, USPAP 2012-2013 does not include a definition of Marketing Time.
Marketing Time is only addressed in the Advisory Opinions (AO 7) and the Advise from
the ASB is that reasonable marketing time is an opinion of the amount of time that might
take to sell a property interest at the concluded market value during the period
immediately after the effective date of an appraisal.
Exposure Time
USPAP requires an opinion of exposure time, not marketing time, when the purpose of
the appraisal is to estimate market value. USPAP 2012-2013 defines Exposure Time 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 a retrospective opinion based on
analysis of past events assuming a competitive and open market.
Marketing Time differs from exposure time, which is always presumed to precede the
effective date of an appraisal. Estimated Exposure Time may be expressed as a range
and can be based on one or more of the following:
•
•
•
Analysis of historical sales information
Analysis of statistical information about days on market
Review of information gathered through sales verifications and interviews of
market participants
So simply stated, Exposure Time is before the appraisal date while Marketing Time is
after the appraisal date.
OR
Exposure Time = Past
Marketing Time = Future
Graphically, these concepts look like this…
Exposure Time
|______________________________________________|
List Date
Sale Date
(Hypothetical)
(Effective Date of Appraisal)
Marketing Time
|______________________________________________|
List Date
Sale Date
(Effective Date of Appraisal)
(Hypothetical)
Exposure Time can be measured by analyzing MLS marketing time (LMT, MT, or
DOM) data. MLS statistics on marketing time is actually a measurement of Exposure
Time, which is why these concepts can be confusing because Marketing Time in our
appraisals (future projection) can not just be extracted from MLS data, which is
historical. Marketing Time must be inferred from the data.
One way to estimate Marketing Time is to start with historical data (exposure time) from
the MLS and then apply the anticipated direction of the market with regards to supply
and demand (i.e. inventory). Under stable market conditions, one would expect the
Exposure Time to equal Marketing Time. But if supply and demand is shifting,
Marketing Time could differ from Exposure Time. For example, if inventory is
increasing, Marketing Time might be longer than Exposure Time. Conversely, if
inventory is declining, Marketing Time might be less than Exposure Time.