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Take advantage of USPAP and Extraordinary Assumptions! Their proper use can provide you with a number of advantages! On the other hand, their improper use can earn you the opportunity to spend a less-than-pleasant afternoon with your state appraisal board! How so? Read on, then listen to the podcast! To listen to the podcast is why you’re here, right?
USPAP and Extraordinary Assumptions means USPAP, under very specific and limited conditions, allows you to guess as a part of your value conclusion. Guess?! Yes! How about an example? You’re appraising a proposed house from the architect’s and contractor’s plans and specs. The effective date of the appraisal is nine (-9-) months into the future, which is when the house will be complete. But right now, only the site, and plans and specs, exist. So, under these limited and specific circumstances, you guess the house will be complete per plans and specs nine (-9-) months into the future. You do not know this since the future is unknown and unknowable. But because you’ve used an Extraordinary Assumption, with a summary of the rationale for making that guess, its OK. You’ve also fully disclosed that guess (that it will be built per plans and specs in nine (-9-) months. And that full disclosure included the admission that, if your guess, your Extraordinary Assumption proves false, could affects the results of the appraisal.
So, it is to our benefit as real estate appraisers to understand and educate ourselves USPAP and Extraordinary Assumptions! This lets us expand our specific scope of business practice since it is possible to appraise as if improved property that, in reality, is actually vacant. How great is that?!