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USPAP 2018-2019 Edition

© The Appraisal Foundation

17

STANDARD 1

Comment: An extraordinary assumption may be used in an assignment only if:

• it is required to properly develop credible opinions and conclusions;

• the appraiser has a reasonable basis for the extraordinary assumption;

• use of the extraordinary assumption results in a credible analysis; and

• the appraiser complies with the disclosure requirements set forth in USPAP for extraordinary

assumptions.

(g) identify any hypothetical conditions necessary in the assignment; and

Comment: A hypothetical condition may be used in an assignment only if:

• use of the hypothetical condition is clearly required for legal purposes, for purposes of reasonable

analysis, or for purposes of comparison;

• use of the hypothetical condition results in a credible analysis; and

• the appraiser complies with the disclosure requirements set forth in USPAP for hypothetical conditions.

(h) determine the scope of work necessary to produce credible assignment results in accordance with the

SCOPE OF WORK RULE.

23

STANDARDS RULE 1-3

When necessary for credible assignment results in developing a market value opinion, an appraiser must:

(a) identify and analyze the effect on use and value of existing land use regulations, reasonably probable

modifications of such land use regulations, economic supply and demand, the physical adaptability of the

real estate, and market area trends; and

Comment: An appraiser must avoid making an unsupported assumption or premise about market area

trends, effective age, and remaining life.

(b) develop an opinion of the highest and best use of the real estate.

Comment: An appraiser must analyze the relevant legal, physical, and economic factors to the extent necessary to

support the appraiser’s highest and best use conclusion(s).

STANDARDS RULE 1-4

In developing a real property appraisal, an appraiser must collect, verify, and analyze all information necessary

for credible assignment results.

(a) When a sales comparison approach is necessary for credible assignment results, an appraiser must

analyze such comparable sales data as are available to indicate a value conclusion.

(b) When a cost approach is necessary for credible assignment results, an appraiser must:

(i)

develop an opinion of site value by an appropriate appraisal method or technique;

(ii)

analyze such comparable cost data as are available to estimate the cost new of the improvements

(if any); and

(iii) analyze such comparable data as are available to estimate the difference between the cost new

and the present worth of the improvements (depreciation).

(c) When an income approach is necessary for credible assignment results, an appraiser must:

(i)

analyze such comparable rental data as are available and/or the potential earnings capacity of the

property to estimate the gross income potential of the property;

23 See Advisory Opinion 28,

Scope of Work Decision, Performance, and Disclosure

, and Advisory Opinion 29,

An Acceptable Scope of Work

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