If an appraiser assumes a condition is true that does not exist, this is known as what?

The correct term for when an appraiser assumes a condition is true that does not actually exist is known as a hypothetical condition. This concept is significant in the field of appraisal because it relates to assumptions made in the process of valuing a property. When appraisers employ a hypothetical condition, they are considering a situation that is contrary to what is known to be true about the property. This can occur, for example, when valuing a property as if it had certain features or in a certain state of repair, despite knowing that these features or conditions do not currently exist.

Hypothetical conditions can be useful for appraisers when evaluating potential values based on projected scenarios. However, they must be disclosed clearly within the appraisal report so that users understand the basis for the valuation and the assumptions that guided the appraiser's conclusions. Recognizing the difference between a hypothetical condition and other types of assumptions, such as extraordinary assumptions, is essential for providing accurate and reliable appraisal services.