What is an example of an extraordinary assumption in appraisal?

An extraordinary assumption involves the appraiser assuming a condition that is not known to be true but is believed to be true based on evidence. This is often necessary when the appraiser lacks certain information or when an assumption is critical to producing a credible opinion of value. For example, an appraiser might assume that a property has no environmental contamination based on a review of available documentation and prior assessments, even though they cannot verify this condition directly at the time of appraisal.

This approach allows the appraisal to proceed on a foundation that is deemed reasonable given the context, but it does require the appraiser to clearly disclose this assumption and the potential impacts on the appraisal's credibility should the assumption prove false. Inherent in this process is the understanding that extraordinary assumptions must be supported by logical evidence; thus, the assumption serves as a basis for analysis while also highlighting potential risks associated with the appraisal's conclusions.

The other options do not accurately reflect the definition of extraordinary assumptions. For example, assuming a fictional scenario or disregarding conditions does not rely on evidence and could lead to unsubstantiated conclusions. Similarly, relying on incomplete information would not align with the requirement for full disclosure of assumptions in an appraisal process.