Extraordinary Assumptions

[RSW]

An appraiser friend and I were discussing extraordinary assumptions over lunch the other day. SR 2-2 says to state all extrordinary assumptions and hypothedical conditions: and state that their use might have affected the assignment results.

My question is: Does the appraiser have to tell how the extraodinary assumption may effect the results?

Example: The appraiser is making an extrordinary assumption that the information obtained from the third party concerning the interior of the dwelling is true and accurate.

Does the appraiser need to explan how this may effect the value of the subject?

Such as: If the extraordinary assumpion is found to be incorrect the value opinion in this report may be lower than that stated in this report. The appraiser reserves the right to adjust the value opinion in this report if this extraordinary assumpion is found to be incorrect.

What are your thought?

Scott

 

[Fred]

Don,
I think the general answer to your question is no, but that is going to depend on what the client asks you. The standard does not go so far as to require quantification of effect. To quantify the effect of assumptions, you would often have to do a separate appraisal. Again, depending on what the client asks, you might have to do more than one appraisal and develop more than one value.

However, there is no getting around the fact the SR itself doesn't make sense, and that has to "affect" any rational attempt to interpret it. In answering this year's ASB request about things in USPAP that don't make sense, and when that language was last modified in 2004, I wrote the ASB that it doesn't make sense to say that the assumptions used "might have" affected results. Assumptions, like all assignment conditions, ALWAYS affect results.