Extraordinary Assumption Example for exterior-only inspection
appraisal assignments:
In accordance with my scope of work decision, an exterior only
inspection of the subject was accomplished for this assignment. An
extraordinary assumption was invoked as of the effective date of the
assignment results, based on information received from reliable
sources, relative to the physical characteristics, interior condition, and
Gross Living Area (GLA) of the subject. The final opinion of value for
this assignment may have been affected by the use of this
assumption.
When the Cost Approach is requested by the Client for Hazard
Insurance purposes, this represents an additional assignment condition
that expands your scope of work.
Sample Statement for the Reconciliation Section of your report:
“The Cost Approach was accomplished at the specific request of the
client. This approach to value was not required to be accomplished by the
appraiser to arrive at a credible assignment result and was not given any
weight in the final reconciliation of value. Maximum weight was assigned
to the Sales Comparison Approach for this reconciliation and final opinion
of value”.
Per Fannie Mae Announcement 08-30, dated November 2008:
If the client wants to know the amount of Hazard Insurance that should be in
place for the improvements being appraised, the complete Cost Approach is
not required. A “total estimated replacement cost new” is all that is
required. That means no site value, no depreciation, and no indicated value
by the Cost Approach.
A comment in the remarks section will indicate this information represents
the “total estimated replacement cost new of the improvements” using
the Marshall & Swift Residential Cost Manual, last updated as of:
_____________.
Ken Guilfoyle, McKissock Instructor