A general assumption that the property has no hidden defects differs from an extraordinary assumption in that the general assumption:
Correct Answer
D) Is a routine condition disclosed in the report's boilerplate
Why this is correct: Is a routine condition disclosed in the report's boilerplate. A general assumption (e.g., no hidden defects) is a standard condition for any appraisal with a typical inspection. An extraordinary assumption is specific and, if false, would alter the conclusion, requiring prominent disclosure. Why the other choices are wrong: Requires the client's written approval applies to hypothetical conditions, not general assumptions. Must be reported prominently and could alter the value if false describes an extraordinary assumption. Applies only to properties older than fifty years is not a defining characteristic. Exam tip: General assumptions are routine; extraordinary assumptions are specific and value-significant.
Why This Is the Correct Answer
A general assumption is a routine background condition applying to appraisals generally and is disclosed among the report's standard limiting conditions.
Why the Other Options Are Wrong
Option A: Requires the client's written approval before it is used
Client approval is not required for general assumptions, which are standard conditions of the appraisal process.
Option B: Must be reported prominently and could alter the value if false
Prominent disclosure and the potential to alter the value if false are the defining features of an extraordinary assumption, not a general one.
Option C: Applies only to properties older than fifty years
General assumptions apply regardless of a property's age. No age threshold governs their use.
Would Being Wrong Change the Value?
Would Being Wrong Change the Value? If yes and it is specific to this job, it is extraordinary.
How to use: Apply the two-part test: specific to this assignment, and consequential if false.
Exam Tip
Distinguish both from a hypothetical condition, which is contrary to a known fact rather than merely uncertain.
Common Mistakes to Avoid
- -Treating every assumption as extraordinary
- -Burying an extraordinary assumption in boilerplate
- -Confusing an extraordinary assumption with a hypothetical condition
Concept Deep Dive
Analysis
USPAP distinguishes sharply between routine assumptions and extraordinary ones, and the test is consequence. A general assumption — that the property has no hidden defects, that title is good, that information from public records is accurate — is a background condition of virtually every appraisal, is not specific to the assignment, and is disclosed in the report's standard limiting conditions. An extraordinary assumption is different in kind: it is directly related to the specific assignment, it is uncertain, and if it proved false the appraiser's opinions or conclusions would change. That last element is what triggers the heightened treatment — an extraordinary assumption must be identified as such, its use must be reasonable, and it must be disclosed prominently rather than buried in boilerplate. The practical discipline is to ask whether the assumption is specific to this assignment and whether being wrong about it would change the value. Two yeses make it extraordinary.
Background Knowledge
USPAP defines an extraordinary assumption as one directly related to a specific assignment which, if found false, could alter the appraiser's opinions or conclusions. General assumptions are routine conditions disclosed among standard limiting conditions.
Real-World Application
An appraiser lists the no-hidden-defects assumption in standard limiting conditions but discloses prominently the extraordinary assumption that a pending zoning change will be approved.
More USPAP Questions
Reconciliation of the approaches to value is best described as which activity?
Why should the reconciliation address the quantity of evidence as well as its quality?
How long must a report be retained compared with the workfile?
What distinguishes an appraisal review from an appraisal?
An appraiser reconciles to a value at the top of the indicated range because the client needs that figure. What has occurred?
What does it mean that a value opinion must be reasonable rather than merely arithmetically derived?
What should the reconciliation section explain to the reader?
How do the content obligations of the two report options differ with respect to the information analyzed?
The three approaches indicate $480,000, $495,000 and $610,000. What should the appraiser do first?
Three approaches indicate $1.02 million, $1.05 million and $1.04 million. How should this be reported?
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