When an appraisal is subject to an extraordinary assumption, the report must state that:
Correct Answer
D) Its use could affect the assignment results
Why this is correct: USPAP requires clear disclosure of any extraordinary assumption (a fact assumed to be true for the analysis that is uncertain). The report must state that the assumption was used and that the appraisal results would be different if the assumption were false. This alerts the user to the conditional nature of the value conclusion. Why the other choices are wrong: "The value is guaranteed regardless of the assumption" is false and misleading. "The client accepts all resulting liability" is not a USPAP disclosure requirement. "The assumption has been independently verified" contradicts the definition of an assumption; if verified, it wouldn't be an assumption. Exam tip: An extraordinary assumption is about an uncertain fact (e.g., "subject to completion per plans"). Always disclose its use and that results depend on it.
Why This Is the Correct Answer
Why this is correct: USPAP requires clear disclosure of any extraordinary assumption (a fact assumed to be true for the analysis that is uncertain). The report must state that the assumption was used and that the appraisal results would be different if the assumption were false. This alerts the user to the conditional nature of the value conclusion. Why the other choices are wrong: "The value is guaranteed regardless of the assumption" is false and misleading. "The client accepts all resulting liability" is not a USPAP disclosure requirement. "The assumption has been independently verified" contradicts the definition of an assumption; if verified, it wouldn't be an assumption. Exam tip: An extraordinary assumption is about an uncertain fact (e.g., "subject to completion per plans"). Always disclose its use and that results depend on it.
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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