When valuing a proposed new building with a prospective effective date, an appraiser is utilizing which type of assumption?

• A. Extraordinary assumption
• B. Hypothetical condition
• C. Market condition analysis
• D. Personal property rights

Answer: (A)

When valuing a proposed building with a prospective date, the appraiser treats the project as if it already exists for the purposes of the assignment. This is an extraordinary assumption because it concerns a condition that is not currently present and, if untrue, would change the appraisal results. By assuming the construction will proceed and be available as of the prospective date, the value reflects what the market would pay under that condition. If the project doesn’t proceed, the value conclusion would differ, which is why this is an assignment-specific, extraordinary assumption. A hypothetical condition would involve assuming something contrary to existing facts to test a scenario, which isn’t what’s being done here. Market condition analysis and personal property rights aren’t about the assumption type used for a proposed build.