Which of the following must be disclosed in an appraisal report when present?
Correct Answer
B) Both extraordinary assumptions and hypothetical conditions
When used, both extraordinary assumptions and hypothetical conditions need the required conspicuous disclosure and a statement that their use might have affected results. They have different meanings and conditions for use; neither disclosure alone nor a vague if statement supplies those conditions.
Why This Is the Correct Answer
Option B is correct because USPAP requires the report to state all extraordinary assumptions and hypothetical conditions. When either is used, it must be clearly and conspicuously disclosed with a statement that its use might have affected the assignment results. Both must be disclosed, even though they have different meanings and conditions for use.
Why the Other Options Are Wrong
Option A: Neither extraordinary assumptions nor hypothetical conditions
Option A is wrong because saying neither extraordinary assumptions nor hypothetical conditions must be disclosed contradicts the requirement to state all of them when used.
Option C: Extraordinary assumptions, but not hypothetical conditions
Option C is wrong because it requires extraordinary assumptions but not hypothetical conditions; USPAP requires hypothetical conditions to be stated as well.
Option D: Hypothetical conditions, but not extraordinary assumptions
Option D is wrong because it requires hypothetical conditions but not extraordinary assumptions; USPAP requires extraordinary assumptions to be stated as well.
Both get the spotlight
EAs and HCs both change what the value rests on, so both must be stated in the report when used.
How to use: Use this when a question asks which special assumptions or conditions need disclosure.
Exam Tip
When a question pairs extraordinary assumptions and hypothetical conditions on disclosure, the answer covering both is the one to check first.
Common Mistakes to Avoid
- -Disclosing only hypothetical conditions because they are contrary to fact
- -Leaving out extraordinary assumptions because they are probably true
- -Treating extraordinary assumptions and hypothetical conditions as the same thing
Concept Deep Dive
Analysis
This question tests disclosure of extraordinary assumptions and hypothetical conditions. USPAP requires the report to state all of them when used. Choose the option that includes both rather than one or neither.
Background Knowledge
An extraordinary assumption concerns uncertain information treated as true as of the effective date, while a hypothetical condition is contrary to known fact but used for analysis. Each has its own conditions for use. When used, both must be disclosed with a statement that their use might have affected the results.
Real-World Application
An appraiser values a house assuming a well test will come back acceptable and also values it as if a planned addition were complete. The report states the extraordinary assumption about the well and the hypothetical condition about the addition, and notes that their use might have affected the results.
More USPAP Questions
Under USPAP, what are assignment results?
The certification required by Standards Rule 2-3 must be signed by:
Under 2024 USPAP, which statement correctly combines the requirements for an oral real property appraisal report and its workfile?
An appraiser accepts an assignment involving a property type the appraiser has valued once before, years ago. Competency requires:
A Certified General appraiser is asked to value a specialized industrial property for the first time. The appraiser knows a competency gap exists before agreeing to the assignment. What is required if the appraiser proceeds?
Under 2024 USPAP Standard 1, which listed assignment element must be identified in developing a real property appraisal?
An appraiser provided an appraisal of the same property for another client 18 months ago. No confidentiality obligation prevents disclosing the fact of that service. Before agreeing to a new assignment, the appraiser must:
According to USPAP, what is the primary purpose of the Ethics Rule?
An appraiser is asked to determine 'fair market value' for an assignment. According to USPAP, the appraiser should:
Which list gives the sections of the 2024 USPAP Ethics Rule?
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