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