Property Valuation
Under USPAP, an 'extraordinary assumption' in an appraisal is an assumption that:
AThe property will appreciate at an above-average rate
BIf found to be false, could alter the appraiser's opinions or conclusions✓ Correct
CThe appraiser makes without disclosing to the client
DThe property is in perfect condition regardless of evidence
Explanation
An extraordinary assumption is a specific assumption about uncertain information that, if found to be false, could materially alter the appraiser's conclusions. Extraordinary assumptions must be clearly stated and disclosed in the appraisal report.
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Key Terms to Know
Appraisal
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
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