What is the difference between extraordinary assumption and hypothetical condition in appraisal terms?

In the context of appraisal terms, the distinction between extraordinary assumptions and hypothetical conditions is crucial for understanding how appraisers approach their evaluations. Both terms have specific definitions within the Uniform Standards of Professional Appraisal Practice (USPAP), which is designed to ensure that appraisals are conducted with integrity and professionalism.

Extraordinary assumptions refer to assumptions that, if found to be false, could alter the appraiser's opinions or conclusions. These are conditions that the appraiser believes to be true for the purpose of completing the appraisal, but which are not backed by certainty or verification at the time of the appraisal. For example, an appraiser might assume that a property’s zoning will remain unchanged in the future, which can significantly affect its market value.

Hypothetical conditions, on the other hand, are conditions that are contrary to known facts. An appraiser uses these conditions to estimate the value of a property as if a certain situation were true. For instance, an appraiser might analyze a property as if it were fully built-out and completed, even though construction is not finished. This helps in assessing how the property might be valued under different circumstances.

Understanding these definitions is essential for accurate property valuation and for compliance with USPAP requirements. The correct answer accurately reflects