An appraisal of a proposed house is completed 'subject to completion per plans and specs.' The report values something that does not yet exist. What assignment condition makes this legitimate?
Correct Answer
C) A hypothetical condition, used because the intended use requires it
Why this is correct: Appraising a proposed improvement requires a hypothetical condition, which treats something contrary to known fact (the house does not exist) as true for the purpose of analysis. This is permitted when required for the intended use and is clearly disclosed. Why the other choices are wrong: This is not an extraordinary assumption about market trends. It is not a jurisdictional exception. A limiting condition excluding the site would not address the core issue of valuing an unbuilt structure. Exam tip: 'Subject to' completion uses a hypothetical condition. Disclose it prominently.
Why This Is the Correct Answer
Why this is correct: Appraising a proposed improvement requires a hypothetical condition, which treats something contrary to known fact (the house does not exist) as true for the purpose of analysis. This is permitted when required for the intended use and is clearly disclosed. Why the other choices are wrong: This is not an extraordinary assumption about market trends. It is not a jurisdictional exception. A limiting condition excluding the site would not address the core issue of valuing an unbuilt structure. Exam tip: 'Subject to' completion uses a hypothetical condition. Disclose it prominently.
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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