Making Sense of Marketing Time and Exposure 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.
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 onanalysis 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.
Exposure Time = Past
Marketing Time = Future
Graphically, these concepts look like this…
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.