What happens if an appraiser uses an extraordinary assumption without a reasonable basis?

When an appraiser uses an extraordinary assumption without a reasonable basis, it can lead to inaccurate opinions or conclusions. Extraordinary assumptions are beliefs made about the conditions or characteristics of the subject property that are not necessarily supported by existing evidence or facts. If these assumptions are unfounded, the appraiser may draw conclusions that misrepresent the property’s true value or characteristics. This can mislead clients and stakeholders who rely on the appraisal for decision-making.

The importance of having a reasonable basis for extraordinary assumptions cannot be overstated, as it ensures that the appraiser’s conclusions are rooted in reality and are defensible. Failure to do so not only undermines the quality of the appraisal but also diminishes the credibility of the appraiser in the eyes of clients, regulatory bodies, and the market.