What must be disclosed in an appraisal report regarding extraordinary assumptions?

What must be disclosed in an appraisal report regarding extraordinary assumptions?

• A. Only the assumptions made by the appraiser
• B. The use of extraordinary assumptions and their potential impact
• C. Assumptions made during the inspection process
• D. Nothing, as they are confidential

Answer: (B)

In an appraisal report, it is essential to disclose the use of extraordinary assumptions and their potential impact on the value conclusion. An extraordinary assumption is an assumption that, if found to be false, could significantly alter the appraiser's opinions or conclusions. By informing the intended users of the appraisal about these assumptions, the appraiser provides transparency regarding the reliability of the appraisal results. This disclosure ensures that users of the report understand the context and limitations of the appraisal. It is particularly important because if an extraordinary assumption is incorrect, it could lead to a misleading appraisal value. Therefore, detailing these assumptions and their possible effects on the conclusion enriches the interpretation and reliability of the appraisal for everyone involved.

In an appraisal report, it is essential to disclose the use of extraordinary assumptions and their potential impact on the value conclusion. An extraordinary assumption is an assumption that, if found to be false, could significantly alter the appraiser's opinions or conclusions. By informing the intended users of the appraisal about these assumptions, the appraiser provides transparency regarding the reliability of the appraisal results.

This disclosure ensures that users of the report understand the context and limitations of the appraisal. It is particularly important because if an extraordinary assumption is incorrect, it could lead to a misleading appraisal value. Therefore, detailing these assumptions and their possible effects on the conclusion enriches the interpretation and reliability of the appraisal for everyone involved.