In what scenario is an extraordinary assumption likely to be necessary?

An extraordinary assumption is often necessary in scenarios where there are unknown variables that could significantly affect the appraisal's outcome. This type of assumption allows appraisers to proceed with their analysis by accepting certain conditions as true, even though they cannot be fully verified. For instance, if certain aspects of the property are unknown—such as zoning regulations, property boundaries, or the condition of key structural elements—an extraordinary assumption may be made about them to complete the appraisal.

In circumstances where the property is vacant, established properties with clear data, or in quickly changing market conditions, it may be possible to analyze and appraise with existing data and observations without needing extraordinary assumptions. Instead, those situations generally rely on available information and market trends to derive values. Thus, the necessity for extraordinary assumptions typically arises primarily in the face of unknowns that are critical to the valuation process.