What is the distinction between a hypothetical condition and an extraordinary assumption?

The distinction between a hypothetical condition and an extraordinary assumption lies primarily in how each concept interacts with known facts and the appraisal process. A hypothetical condition assumes something that is not true or contrary to known facts, which is precisely what makes it "hypothetical." For example, an appraiser might assume that a property is located in a different zoning area than it actually is for the sake of conducting an analysis.

In contrast, an extraordinary assumption relates to a fact that is assumed to be true, even if it is not verified, and often is based on the appraiser’s professional judgment. This could involve assumptions about property condition, market conditions, or other relevant factors that are critical to the appraisal but may lack full verification or support at the time of the analysis.

Understanding this distinction is crucial for appraisers, as both items must be addressed carefully to ensure that the appraisals uphold professional standards and integrity as guided by USPAP.