What are the examples of hypothetical condition?
For example, a hypothetical condition is established at the beginning of an assignment that the improvements are constructed as of the effective date (when in fact the site is vacant.) The highest and best use of the property “as if improved” must then be considered.
What is meant by hypothetical condition?
A hypothetical condition is an assumption made contrary to fact, but which is assumed for the purpose of discussion, analysis, or formulation of opinions.
When would you use a hypothetical condition?
In an appraisal assignment, a hypothetical condition is used when a property is appraised under a condition that is contrary to what is known by the appraiser to exist on the effective date of the assignment results.
What is an example of an extraordinary assumption?
Extraordinary assumptions can be used only for situations where information is unknown or uncertain. For example, if the borrower had handed Jim a copy of the engineer’s report at the time of the appraisal inspection stating the home is not structurally sound, this factor would not be unknown.
Where would you find a statement dealing with any extraordinary assumptions or hypothetical conditions?
In conclusion, each extraordinary assumption and hypothetical condition should be included in the General Assumptions and Limiting Conditions section of the appraisal report.
What is an assignment condition in an appraisal?
ASSIGNMENT CONDITIONS: Assumptions, extraordinary assumptions, hypothetical conditions, laws and regulations, jurisdictional exceptions, and other conditions that affect the scope of work.
What are limiting conditions in valuation report?
Limiting Condition #1
“The appraiser assumes that there are no hidden or unapparent conditions of the property, subsoil, or structures, which would render it more or less valuable. The appraiser assumes no responsibility for such conditions, or for engineering which might be required to discover such factors.”
When an issue necessary to the development of the value opinion is uncertain as of the effective date of the assignment results of the appraiser will use?
When an issue necessary to the development of the value opinion is uncertain as of the effective date of the assignment results, it is an example of: an extraordinary assumption.
When you appraise a property under an unknown condition that is assumed to exist as of the effective date of the value you are using a an?
If, as of the effective date of the appraisal, the fact of the condition is unknown and it is reasonable to believe that the condition is true, then the condition is an extraordinary assumption.
What specific requirements if any apply to the development of a value opinion that is based on non market financing?
What specific requirements apply to the development of a value opinion based on non-market financing? The appraiser must examine documentation sufficient to identify the extent and characteristics of proposed improvements.
Does Fannie Mae allow extraordinary assumptions?
Freddie Mac and Fannie Mae do not permit extraordinary assumptions about the reliability of information provided by other sources for desktop appraisals. Per Fannie Mae, an extraordinary assumption is not required as appraisers must have data sources that they consider reliable.
Can the effective date of an appraisal be changed?
If the client is asking for an appraisal with a different effective date, the appraiser needs to determine the appropriate scope of work to produce credible assignment results for this request. Such a request would need to be considered a new assignment, but that does not necessarily require starting from scratch.
Does surplus land have value?
Surplus land does not have a separate value, as it cannot be sold off separately. It is “extra” land that may or may not contribute value to the overall property. It does not have an independent highest and best use.
What does excess mean in real estate?
Excess property means real or personal property under the control of a Federal agency that is not required for the agency’s needs and the discharge of its responsibilities.
What is land residual?
Residual land value is a method for calculating the value of development land. This is done by subtracting from the total value of a development, all costs associated with the development, including profit but excluding the cost of the land.
What is the difference between excess and surplus land?
Remember, excess land is land that is not needed to serve or support the existing improvement. Excess land can be partitioned, sold separately, and valued separately. Surplus land is land that is not needed to serve or support the existing improvement, but it cannot be separated from the property and sold off.
How do you do a highest and best use analysis?
Here’s a breakdown of the four criteria that Highest and Best Use must meet.
- Physically possible. You must consider the size, shape, topography, and accessibility of the site when determining if it is physically possible. …
- Legally permissible. …
- Financially feasible. …
- Maximally productive.
What is the number one rule of adjusting comparables?
Therefore, comparable 1 must be adjusted downward to consider how it would be valued if it were constructed of average quality. Applying the total adjustments to the original price per square foot for each property results in an adjusted price per square foot and adjusted overall sales price for each comparable.