An appraiser may use an extraordinary assumption only when:
Correct Answer
C) It is required for credible results and disclosure is made
Why this is correct: USPAP allows an extraordinary assumption only when it is necessary for credible assignment results, is reasonable, and is clearly disclosed in the report. It is used when specific information is unknown but can be assumed for analysis. Why the other choices are wrong: 'Verification would take more than one day' is not a valid justification; convenience does not warrant an assumption. 'The client requests it in writing' does not alone make it professionally acceptable. 'The assumption favors the client's position' is unethical and violates USPAP's impartiality requirement. Exam tip: An extraordinary assumption is for unknown facts; a hypothetical condition is for contrary-to-fact conditions.
Why This Is the Correct Answer
The two-part test in the correct answer captures the substance of the rule: necessity and disclosure. Necessity means the assumption is required to reach a credible result, not merely convenient, which rules out using one to skip work the appraiser could reasonably perform. Disclosure means the assumption is stated conspicuously, along with a statement that its use might have affected the assignment results. Choice C is the only option that ties the assumption to credibility rather than to convenience, client preference, or outcome.
Why the Other Options Are Wrong
Option A: Verification would take more than one day
Effort and turnaround time are not the standard. If a fact can be verified through reasonable research, verifying it is part of the scope of work, and an appraiser who assumes it instead has narrowed the work for convenience rather than for credibility. Extraordinary assumptions exist for information that is genuinely uncertain as of the effective date, such as an unavailable soils report or an interior no one can access, not for research that is simply inconvenient.
Option B: The client requests it in writing
A client can request an assumption, and clients frequently do, but a request is an assignment condition, not an authorization. The appraiser must still independently conclude that the assumption is necessary for credible results, that there is a reasonable basis for it, and that using it will not produce a misleading report. Assignment conditions that would preclude credibility or that would cause the report to mislead cannot be accepted no matter how clearly the client puts them in writing.
Option D: The assumption favors the client's position in the matter
Selecting an assumption because it helps a party is the definition of a biased analysis and collides directly with the requirement that an appraiser perform assignments with impartiality, objectivity, and independence. It also edges toward a predetermined conclusion, since the assumption is chosen for the result it produces rather than for what the evidence suggests. The reasonableness test asks what is likely true, not what is favorable.
Needed, Reasonable, Disclosed
Three locks on the same door. The assumption must be needed for credibility, reasonable to make, and disclosed conspicuously. Fail any one lock and the door stays shut, no matter who is asking.
How to use: Test each option against the three locks. Options built on time, cost, client instruction, or a favorable outcome fail on the first lock and can be eliminated before you read them closely.
Exam Tip
Sort the two devices by what you know. Uncertain fact means extraordinary assumption; known to be contrary to fact means hypothetical condition. Stems about proposed construction or an assumed rezoning are hypothetical condition questions.
Common Mistakes to Avoid
- -Using an extraordinary assumption to avoid research the appraiser could reasonably perform
- -Treating a written client request as sufficient authorization for an assumption
- -Confusing an extraordinary assumption with a hypothetical condition
Concept Deep Dive
Analysis
An extraordinary assumption is an assumption, directly related to a specific assignment as of the effective date, about uncertain information that, if found to be false, could alter the appraiser's opinions or conclusions. USPAP gates its use behind a short list of conditions that must all be satisfied: the assumption must be required for credible assignment results, the appraiser must have a reasonable basis for it, its use must still result in a credible analysis, and it must be clearly and conspicuously disclosed so that any intended user is alerted that the opinion depends on it. The gating exists because an extraordinary assumption transfers risk to the reader, who is being told to accept an unverified fact as though it were established. Keep it distinct from a hypothetical condition, which is contrary to what is known to exist rather than merely uncertain, and which carries its own requirement of a reasonable purpose such as a proposed-improvements or remediation scenario.
Background Knowledge
You need the USPAP definitions of extraordinary assumption and hypothetical condition and the conditions attached to using each, including necessity for credible results, a reasonable basis, and conspicuous disclosure. You should also know the Ethics Rule's independence and impartiality requirements and the limits on accepting assignment conditions from a client.
Real-World Application
An appraiser inspecting a tenant-occupied duplex cannot access the second unit and, with support from the leases, prior photographs, and the exterior, appraises subject to an extraordinary assumption that the interior condition of the unseen unit is similar to the inspected unit, stating the assumption in the letter of transmittal, the scope of work, and the certification.
More USPAP Questions
Which statement best defines a hypothetical condition under USPAP?
According to the Competency Rule, if an appraiser lacks the knowledge and experience to complete an assignment competently, which action is NOT acceptable?
An appraiser runs only the sales comparison approach on a standard tract home and omits the cost and income approaches. Under Standard 1 this is:
A value opinion for a subdivision as if fully built out two years from now is what kind of assignment, and what does it require?
A hypothetical condition differs from an extraordinary assumption in that a hypothetical condition:
An appraiser must disclose in the certification whether they have:
A client-imposed requirement — 'use only comps from our approved list' — is best described as:
Under Standard 1, when developing a real property appraisal, an appraiser must:
The certification required by Standards Rule 2-3 must be signed by:
According to Standard 1, when developing an opinion of market value, an appraiser must analyze:
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