A client instructs the appraiser to assume a zoning change that has not occurred. This is:
Correct Answer
B) A hypothetical condition requiring prominent disclosure
Why this is correct: A hypothetical condition is an assumption that is contrary to what is known to exist at the time of the appraisal. Since the current zoning is a known fact, assuming a different zoning is a hypothetical condition. USPAP permits its use for a legitimate purpose but requires it to be prominently disclosed and its impact on value clearly stated. Why the other choices are wrong: An extraordinary assumption is about a fact that is uncertain but plausible (e.g., a future zoning change *might* happen). This is contrary to fact, so it's hypothetical. It is not a jurisdictional exception. It is not prohibited; it is permitted with proper disclosure. Exam tip: Hypothetical condition = contrary to known fact. Extraordinary assumption = uncertain but possible fact.
Why This Is the Correct Answer
Why this is correct: A hypothetical condition is an assumption that is contrary to what is known to exist at the time of the appraisal. Since the current zoning is a known fact, assuming a different zoning is a hypothetical condition. USPAP permits its use for a legitimate purpose but requires it to be prominently disclosed and its impact on value clearly stated. Why the other choices are wrong: An extraordinary assumption is about a fact that is uncertain but plausible (e.g., a future zoning change *might* happen). This is contrary to fact, so it's hypothetical. It is not a jurisdictional exception. It is not prohibited; it is permitted with proper disclosure. Exam tip: Hypothetical condition = contrary to known fact. Extraordinary assumption = uncertain but possible fact.
More USPAP Questions
Which type of appraisal report may contain the appraiser's analyses, opinions, and conclusions but is intended for use by the client only?
How long must an appraiser retain the workfile for an appraisal assignment under USPAP?
If an appraiser uses a hypothetical condition that the subject property is 10% larger than it actually is, this must be:
Under Standard 1, when developing a real property appraisal, an appraiser must:
An appraiser accepts an assignment to appraise a specialized industrial property but has never appraised this property type before. To comply with the Competency Rule, the appraiser:
According to the Scope of Work Rule, the scope of work must be appropriate to the:
According to Standard 1, when developing an opinion of market value, an appraiser must analyze:
A lender emails: 'We need at least $450,000 to make this loan work — can you take the assignment?' Accepting on that basis is:
An appraiser is developing an opinion of market value for a 20-unit apartment building. The appraiser finds three comparable sales with the following information: Sale 1: 18 units, sold for $1,800,000; Sale 2: 22 units, sold for $2,200,000; Sale 3: 24 units, sold for $2,280,000. What is the average price per unit for these comparables?
In developing a scope of work, an appraiser must consider all of the following factors EXCEPT:
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