The Appraisal Institute published “Guide Note 14: Concept of Exposure Time” Feb. 12 to help appraisers understand exposure time and how to incorporate its analysis into appraisals.
The guidance addresses how appraisers should link exposure time, which refers to the time a property remains on the market, to their value opinion and comply with the Uniform Standards of Professional Appraisal Practice.
The Guide Note states, “An analysis and opinion of Exposure Time is required for appraisals where the definition of value is tied to a reasonable or stipulated exposure time. A discussion of exposure time allows the intended user(s) to put the appraiser’s value opinion into context. It also serves as the foundation on which appraisers describe market conditions, analyze comparable sales, and reconcile an opinion of value to the actual sale price.”
Exposure time is not a fixed period and can differ for various types of property and under diverse market conditions. It is a function of price, market conditions and property characteristics, and the basis for an opinion of exposure time should include one or more of the following:
• Statistical information about days on market for similar types of property;
• Information gathered through sales verification;
• Interviews of market participants; and
• Market information from data collection services.
The new “Guide Note 14: Concept of Exposure Time” is available here.