What must an appraisal report state when an extraordinary assumption is used?

When an extraordinary assumption is utilized in an appraisal report, it is essential to specifically state that the use of this assumption may have affected the results of the appraisal assignment. Extraordinary assumptions are conditions that are presumed to be true for the purpose of the analysis but may not actually exist. By acknowledging this in the report, it ensures transparency about the potential impact of these assumptions on the final valuation. This safeguards against misinterpretation of the appraisal results, allowing the intended audience to understand the context and limitations of the analysis.

The requirement to disclose the effect of the extraordinary assumption is crucial for the credibility of the appraisal and informs users of possible uncertainties surrounding the valuation. This kind of disclosure helps in maintaining professionalism and adherence to appraisal standards, ensuring that all parties are fully aware of the implications of the assumptions made.