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 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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