What does the term "extraordinary assumption" refer to in appraisal reports?

The term "extraordinary assumption" in appraisal reports refers to a situation where the appraiser makes an assumption that is not typical or common, often based on specific or atypical circumstances surrounding the property or market conditions. This assumption is made for the purpose of completing the appraisal and is essential when certain crucial information cannot be obtained.

In appraisals, extraordinary assumptions are necessary when determining the value of a property under conditions that may not apply to the general market. For instance, an appraiser might assume that a property will not be impacted by future zoning changes, which is an irregular situation. This type of assumption needs to be clearly stated and justified in the report, as it influences the appraisal’s outcome and can have significant implications for its validity.

This definition aligns closely with the appraisal standards and ethical guidelines outlined in professional practices, emphasizing the necessity of transparency about assumptions made during the appraisal process.