Which situation calls for an extraordinary assumption rather than a hypothetical condition?
Correct Answer
C) Assuming an unverified square footage is accurate
Why this is correct: An extraordinary assumption is used for something that is uncertain but could be true, while a hypothetical condition is used for something known to be false on the effective date. Assuming an unverified square footage is accurate deals with an uncertain fact, making it an extraordinary assumption. Why the other choices are wrong: Valuing land as though a planned building existed, valuing a property as though rezoning had occurred, and valuing a partial interest as though it were whole all involve scenarios the appraiser knows are not true as of the effective date, so they are hypothetical conditions. Exam tip: Remember: "Could it be true but we don't know?" = extraordinary assumption. "We know it's false right now?" = hypothetical condition.
Why This Is the Correct Answer
Why this is correct: An extraordinary assumption is used for something that is uncertain but could be true, while a hypothetical condition is used for something known to be false on the effective date. Assuming an unverified square footage is accurate deals with an uncertain fact, making it an extraordinary assumption. Why the other choices are wrong: Valuing land as though a planned building existed, valuing a property as though rezoning had occurred, and valuing a partial interest as though it were whole all involve scenarios the appraiser knows are not true as of the effective date, so they are hypothetical conditions. Exam tip: Remember: "Could it be true but we don't know?" = extraordinary assumption. "We know it's false right now?" = hypothetical condition.
More reconciliation Questions
An appraiser is told the property has no environmental contamination and cannot verify it. How should this be handled?
Reconciliation of the approaches to value is best described as which activity?
Significant appraisal assistance from a person who does not sign the report must be treated how?
In appraising a hotel as a going concern, what must be allocated?
What does it mean to say an approach is not applicable to an assignment?
Which of the following is a written report option named in the current edition of USPAP?
What distinguishes qualitative from quantitative analysis in the sales comparison approach?
Why should the reconciliation address the quantity of evidence as well as its quality?
An appraisal report includes an addendum explaining the adjustment derivation. How does this affect compliance?
An extraordinary assumption proves false after the report is delivered. What follows?
People Also Study
Valuation Principles & Procedures
25% of exam
Property Description & Analysis
20% of exam
Market Analysis & Highest/Best Use
15% of exam
Appraisal Math & Statistics
15% of exam
USPAP (Ethics & Standards)
15% of exam