Assumptions & Exposure Time
~9 min read · State limiting conditions and develop an exposure-time opinion that matches the value.
Every appraisal rests on stated conditions — ordinary assumptions, extraordinary assumptions, hypothetical conditions, limiting conditions — plus an exposure-time opinion that anchors the value definition. The exam tests the vocabulary and the exposure-vs-marketing distinction.
The condition ladder
General/ordinary assumptions: standard premises (title is good, no hidden defects, competent management) stated in limiting conditions. Extraordinary assumptions: assignment-specific uncertain facts presumed true, whose falsity would change conclusions — disclosed prominently. Hypothetical conditions: known-contrary-to-fact premises used for analysis — disclosed prominently. Limiting conditions: boundaries on the appraisal's use and the appraiser's liability (no survey performed, no environmental expertise). None of them may be used to mislead or to duck required analysis.
- Ordinary assumptions live in limiting conditions
- Extraordinary = uncertain-presumed-true; hypothetical = known-false
- Prominent disclosure with effect on value
- Conditions never excuse required competence or analysis
Exposure time
Exposure time: the estimated time the property would have been on the market BEFORE the effective date, at the concluded value — a retrospective construct baked into the market-value definition; USPAP requires developing an opinion of it when market value is the objective. Support: DOM statistics for comparable sales, market interviews. Marketing time looks FORWARD from the effective date — a consulting estimate, not part of the value definition.
- Exposure time: backward-looking, part of the value opinion
- Marketing time: forward-looking, separate commentary
- Supported by DOM data and market evidence
Why exposure time moves value
Value and time are one opinion: '$500,000 with 90 days' exposure' differs from '$500,000 in 10 days' (that price was below market) or 'after 400 days' (above). Assignment conditions demanding a SHORT sale window (liquidation, disposition values) define DIFFERENT value types with different numbers — the exam's point: a forced timeline changes the definition, not just the marketing plan.
Worked example
A lender needs market value on a warehouse; comparable sales averaged 7 months on market. The client adds: 'also, what would it fetch if we had to sell in 60 days?' And the environmental report is pending — the appraiser values it presuming no contamination. Assemble the conditions and time opinions.
The pending report: contamination status is UNCERTAIN — an extraordinary assumption (presumed clean), prominently disclosed with the warning that contamination would change the value; if the client instead asked for the value AS IF remediated of KNOWN contamination, that would be a hypothetical condition. Exposure time: from the comp DOM evidence, ≈ 7 months — stated with the market-value conclusion as its retrospective premise. The 60-day question: that is a disposition/liquidation-type value — a different definition with a shorter-than-market timeline, producing a LOWER number, reported as a separate opinion with its own definition, never blended into market value. One report, three disciplines: label the assumption, support the exposure time, split the value definitions.
Common exam pitfalls
Confusing exposure time with marketing time.
Exposure looks backward (built into market value); marketing looks forward (separate estimate).
Giving one number for market and quick-sale values.
A compressed timeline defines a different value type — separate definition, separate (lower) opinion.
Hiding conditions in boilerplate.
Extraordinary assumptions and hypothetical conditions are disclosed prominently, with their effect on results.
Assume the unknown, hypothesize the untrue, limit the liability — and every market value carries its months on the market.
Recap
- Ordinary assumptions, extraordinary assumptions, hypothetical conditions, limiting conditions — four labeled tools
- Prominent disclosure with effect on value
- Exposure time: retrospective, required with market value
- Marketing time: prospective, separate
- Short-window assignments = different value definitions
- Conditions never launder missing analysis
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