Property Valuation
A Pennsylvania appraiser's 'extraordinary assumption' in an appraisal report means the appraiser:
AIs making an exceptionally accurate estimate
BAssumes an uncertain fact to be true without verification for purposes of the analysis✓ Correct
CHas extraordinary qualifications for the assignment
DIs providing a preliminary estimate subject to final inspection
Explanation
An extraordinary assumption is an assumption about an uncertain condition that, if found to be false, could alter the appraiser's opinions or conclusions. USPAP requires extraordinary assumptions to be clearly stated in the report so users understand the analysis is contingent on the assumed condition being true.
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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.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
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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