Property Valuation
A Virginia appraiser's 'extraordinary assumption' in an appraisal report means they assume:
AAn extraordinary market exists
BA condition that may or may not be true as a fact that, if wrong, could alter the value conclusion✓ Correct
CThe property is in perfect condition
DThe comparable sales are all perfect
Explanation
An extraordinary assumption is an assumption about uncertain facts that, if incorrect, could significantly alter the value opinion. USPAP requires appraisers to disclose extraordinary assumptions and their potential effect on value.
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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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