Within the Uniform Standards of Professional Appraisal Practice (USPAP), there are two distinct types of assumptions when it comes to appraisal: extraordinary assumptions and hypothetical assumptions.
Extraordinary assumptions are assumptions directly related to a specific assignment which, if found to be false, could alter the appraiser’s opinions or conclusions. Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of a piece of equipment or machinery, or about conditions external to the equipment, such as market conditions or trends.
Hypothetical assumptions are assumptions that are contrary to what exists but are entertained for the purpose of analysis. Hypothetical conditions assume conditions contrary to known facts about physical, legal, or economic conditions, or about conditions or facts lying outside the observable scope of discussion or analysis, such as market conditions or trends known to be contrary to known conditions.
The distinction between hypothetical conditions and extraordinary assumptions can carry a legal consequence and are most important in analytical fields where calculations or representations of professional opinions based on such assumptions are communicated by a professional, such as a Certified Machinery & Equipment Appraiser (CMEA), to a client.
The NEBB Institute endorses and strives to observe the highest standards of professional ethics to preserve the public trust inherent in the professional appraisal practice. The Institute provides initial and monthly comprehensive education, ongoing support, and a dynamic international network, and certifies professionals in the art of machinery/equipment appraisal and brokerage.
By: NEBB Institute
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