Exposure Time

January 1, 1 6 min read Exposure Time Real Estate Appraisal Property Valuation Marketing Time Selling Time
Exposure Time in appraisal terminology refers to the estimated amount of time it would have taken to sell the subject property prior to the date of the appraised value. This metric contrasts with Marketing Time, which is considered after the appraised value date.
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Definition

Exposure Time is a crucial concept in real estate appraisals that estimates the amount of time a property would have been listed on the market before being sold at its appraised value. This estimation assumes an open and competitive real estate market and considers the property’s characteristics, local market conditions, and the transaction dynamics during the lead-up to the appraisal date.

Exposure time is retrospective, meaning it reflects the period before the appraisal date. In contrast, marketing time looks forward, estimating how long it would take to sell the property starting from the appraisal date.

Examples

  1. Example 1: In an appraisal dated July 1, 2017, the appraiser estimates an exposure time of six months. This means that the subject property would typically need about six months on the market to achieve the appraised value as of July 1, 2017.

  2. Example 2: A residential property appraised at $500,000 as of January 1, 2023, was assessed with an exposure time of three months. Hence, it suggests the property needed three months in the market before reaching the appraised value by the specified date.

Frequently Asked Questions

Q: How is exposure time different from marketing time? A: Exposure time estimates how long a property would have been on the market before the appraisal date to sell at the appraised value. Marketing time estimates the time required to sell the property after the appraisal date.

Q: Why is exposure time important in real estate appraisals? A: It provides insight into market conditions and the demand for similar properties prior to the appraisal date, aiding lenders and buyers in understanding market dynamics and assessing risk.

Q: What factors influence exposure time? A: Several factors influence exposure time, including market conditions, property location, property type, price levels, and economic trends.

  1. Marketing Time: The estimated period necessary to sell a property starting from the date of assessment or appraisal.
  2. Appraised Value: The professional estimation of a property’s market value, based on a systematic analysis.
  3. Days on Market (DOM): A measurement of how many days a property has been listed on the market before it is sold.

Online Resources

  1. Appraisal Institute – Offers resources and educational materials for real estate appraisers.
  2. Federal Housing Finance Agency (FHFA) – Provides oversight and information on appraisal policies and regulations.
  3. American Society of Appraisers – Contains valuable tools and articles on appraisal practices and methods.

References

  1. “The Appraisal of Real Estate” by Appraisal Institute
  2. “Real Estate Principles” by David C. Ling and Wayne R. Archer
  3. “Fundamentals of Real Estate Appraisal” by William L. Ventolo Jr. and Martha R. Williams

Suggested Books for Further Studies

  1. “Real Estate Appraisal: From Value to Worth” by Sarah Sayce, Judy Smith, and Richard Cooper
  2. “Mastering Real Estate Appraisal” by Dennis H. Carr, George Eaton, and Therese D’Auria
  3. “Real Estate Market Valuation and Analysis” by Joshua Kahr and Michael C. Thomsett

Real Estate Basics: Exposure Time Fundamentals Quiz

### What does exposure time measure in an appraisal? - [x] The estimated time needed to sell a property before the appraisal date. - [ ] The estimated marketing period after the appraisal date. - [ ] The time a property remains unsold on the market. - [ ] The time it takes for a property to be appraised. > **Explanation:** Exposure time assesses the period necessary to sell a property before the appraisal date to attain the appraised value. ### How is exposure time typically expressed? - [ ] In dollars. - [ ] As a percentage of appraised value. - [x] In months or days. - [ ] In years from property construction. > **Explanation:** Exposure time is generally expressed in months or days, reflecting how long prior to the appraisal date the property would have been on the market. ### Why is exposure time critical for lenders? - [x] It helps gauge the market conditions and potential risks associated with a property. - [ ] It automatically determines loan approval. - [ ] Lenders use it to set property prices. - [ ] It reflects the migration patterns. > **Explanation:** Understanding exposure time allows lenders to evaluate market conditions and associated risks when financing a property. ### How does exposure time relate to appraised value? - [ ] They are unrelated. - [ ] Exposure time affects property depreciation. - [x] It indicates the period needed to achieve the appraised value. - [ ] It sets the initial listing price. > **Explanation:** Exposure time indicates the period required to sell the property for the appraised value under normal market conditions. ### What external factor does NOT directly affect exposure time? - [ ] Market demand - [ ] Property location - [ ] Economic trends - [x] Landscaping choices > **Explanation:** While landscaping can impact a property's appeal, it does not directly affect the market factors that influence exposure time like demand, location, and economic conditions. ### Which term can be confused with exposure time but generally relates to the future instead of the past? - [x] Marketing Time - [ ] Days on Market (DOM) - [ ] Selling Time - [ ] Contract Time > **Explanation:** Marketing time estimates the future period it would take to sell a property from the appraisal date, making it prospective compared to the retrospective exposure time. ### What does a longer exposure time imply about market conditions? - [x] Slower market conditions or less demand. - [ ] Higher buyer activity. - [ ] Quickly increasing property prices. - [ ] Fewer properties available. > **Explanation:** A longer exposure time usually suggests slower market conditions or decreased demand for properties similar to the subject property. ### Who typically estimates exposure time? - [ ] Real estate agents - [ ] Homeowners - [ ] Mortgage brokers - [x] Real estate appraisers > **Explanation:** Real estate appraisers are professionals who estimate exposure time based on an array of market data and property analysis. ### Which agency provides guidelines that impact how exposure time should be evaluated in appraisals? - [ ] Federal Trade Commission (FTC) - [x] Federal Housing Finance Agency (FHFA) - [ ] Consumer Financial Protection Bureau (CFPB) - [ ] Centers for Disease Control and Prevention (CDC) > **Explanation:** The Federal Housing Finance Agency (FHFA) offers oversight and guidelines ensuring that appraisals, including exposure time assessments, are carried out consistently and accurately. ### What kind of market condition could lead to zero exposure time? - [ ] Extreme overpricing - [x] Hyper-competitive market - [ ] Economic recession - [ ] High-interest rates > **Explanation:** In a hyper-competitive real estate market, properties may sell almost immediately upon listing, indicating a virtually zero exposure time.
Sunday, August 4, 2024
Express Agency
Exposure (Physical)
Marketing Time January 1, 1
Adjusted Sales Price January 1, 1
Adjustments (In Appraisal) January 1, 1
Age-Life Method of Depreciation January 1, 1
Appraisal Approach January 1, 1
Appraisal Institute January 1, 1
Appraisal Management Company (AMC) January 1, 1
Appraisal Process January 1, 1
Appraisal Report January 1, 1
Appraisal Review January 1, 1

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