When must an appraiser make an extraordinary assumption during an assignment?

An appraiser makes an extraordinary assumption during an assignment when it is necessary to develop credible results. An extraordinary assumption is a specific condition that is presumed to be true for the purpose of the appraisal, despite the fact that it may not be substantiated by actual evidence. This assumption is typically made when the appraiser cannot confirm certain facts or conditions that are critical to the valuation process, but the assumption is essential for completing the appraisal.

This practice recognizes that the appraiser is operating in an environment where certain pieces of information may be unavailable or uncertain. By using an extraordinary assumption, the appraiser can proceed with the analysis, as long as it is disclosed in the report and clearly stated that the assumed condition may impact the reliability of the appraisal opinion.

In contrast, other options relate to situations that may not warrant the use of extraordinary assumptions. For instance, simply being requested by the client or the presence of volatile market conditions may not inherently require such assumptions. Moreover, assuming facts simply because they are uncertain does not necessarily justify the use of extraordinary assumptions unless doing so is essential for achieving credibility in the appraisal results. Thus, making an extraordinary assumption is closely tied to the need for delivering a credible appraisal outcome under specific circumstances.