In an appraisal report, an assumption that the property is free of hazardous materials is:
Correct Answer
D) A general assumption that should be disclosed
Why this is correct: In a typical limited inspection, the appraiser assumes the property is free of hazardous materials without specific testing. This is a "general assumption" that should be disclosed in the report to inform the user of the basis for the appraisal. It becomes an extraordinary assumption only if there is a specific reason to suspect contamination and the appraiser assumes it away anyway. Why the other choices are wrong: "Unnecessary to state in any report" is wrong because USPAP requires disclosure of assumptions that affect the analysis. "An extraordinary assumption in every case" is wrong; it is only extraordinary if there is a known suspicion of a problem. "A hypothetical condition requiring prominence" is wrong; a hypothetical condition assumes something contrary to fact, which is not the case here. Exam tip: General assumptions are common and should be disclosed; they become extraordinary only when there is specific suspicion.
Why This Is the Correct Answer
Why this is correct: In a typical limited inspection, the appraiser assumes the property is free of hazardous materials without specific testing. This is a "general assumption" that should be disclosed in the report to inform the user of the basis for the appraisal. It becomes an extraordinary assumption only if there is a specific reason to suspect contamination and the appraiser assumes it away anyway. Why the other choices are wrong: "Unnecessary to state in any report" is wrong because USPAP requires disclosure of assumptions that affect the analysis. "An extraordinary assumption in every case" is wrong; it is only extraordinary if there is a known suspicion of a problem. "A hypothetical condition requiring prominence" is wrong; a hypothetical condition assumes something contrary to fact, which is not the case here. Exam tip: General assumptions are common and should be disclosed; they become extraordinary only when there is specific suspicion.
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:
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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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An appraiser is asked to complete an assignment using only the cost approach due to a local regulation, even though USPAP would normally require consideration of all three approaches. This situation would require:
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