Valuation Management Group serves as an appraisal management services company dealing with many unique appraisal issues and methodologies. As our quality assurance appraisal reviewers notice areas of interest, we strive to share these points of interest with our clients and appraisers to keep everyone informed.
The Uniform Standards of Professional Appraisal Practice (USPAP) state in Standards Rule 2-1 (c) that each written or oral real property appraisal must “clearly and accurately disclose all assumptions, extraordinary assumptions, hypothetical conditions, and limiting conditions used in the assignment.” USPAP defines an extraordinary assumption as “An assumption, directly related to a specific assignment, as of the effective date of the appraisal results, which, if found to be false, could alter the appraiser’s opinions or conclusions.” In other words, an extraordinary assumption is something that the appraiser assumes to be true, but has no way of knowing for sure.
There are a variety of circumstances and situations that could require an appraiser to use an extraordinary assumption and a full list of every probably extraordinary assumption would be impossible to capture. For example, many times when appraisers perform the property inspection, they may not be given access to all areas of the subject property. Therefore an extraordinary assumption regarding the unobserved areas would likely be necessary. Another example of a necessary extraordinary assumption is when new construction is pending. The appraiser can develop a prospective opinion of value based upon the extraordinary assumption that the planned construction will occur according to plans, budget, and specs, and by a certain date in the future. In this case, the appraiser should also comment on any expected market changes in the time period between the date of report and the effective date of the prospective opinion of value.
The appraiser bears the responsibility to clearly disclose any extraordinary assumptions that have been relied upon. As part of our appraisal review, VMG quality assurance reviewers are checking to make sure that the necessary extraordinary assumptions are appropriate to the assignment, have been fully disclosed, and clearly labeled to not be misleading. Valuation Management Group’s staff consists of over 40% licensed or certified appraisers with over 20 years of experience. These two assets of the VMG team are unique among appraisal management companies.
Valuation Management Group is a national, residential and commercial appraisal management services company that manages the appraisal process, including the appraisal review, for financial institutions, banks, mortgage bankers, and credit unions. VMG offers a full array of commercial and residential appraisal products and services. The company’s goal is to take the appraisal process from ordinary to extraordinary for its clients and appraisers.