What is one possible consequence of failing to disclose extraordinary assumptions?

Failing to disclose extraordinary assumptions in an appraisal can lead to several significant consequences, and it is important to understand each implication.

When extraordinary assumptions are not disclosed, the appraisal may indeed be considered incomplete. Disclosure is critical to ensure that the appraisal is fully transparent and that all parties understand the basis on which the value has been estimated. Without this information, the methodology might appear flawed or unsubstantiated.

Furthermore, intended users may be misinformed if these assumptions are not communicated. Extraordinary assumptions are key factors that can greatly influence the valuation; if the intended users are not made aware of these assumptions, their understanding and interpretation of the appraised value could lead to incorrect conclusions or decisions based on misleading information.

Additionally, a failure to disclose these assumptions can lead to the appraisal report being rejected by the client. Clients expect full transparency and adherence to standards, and a lack of disclosure undermines the credibility of the appraiser’s work.

Therefore, all of these consequences highlight why it is essential to disclose extraordinary assumptions in appraisal reports. They ensure that outcomes are reliable, that users have a complete understanding of the appraisal, and that the appraiser maintains professionalism and adheres to standards set forth in the USPAP guidelines.