USPAP Practice Exam 2025 – Complete All-in-One Guide to Mastering Professional Appraisal Standards

In the context of appraisal standards, an appraiser examining a property that has known issues but assumes it is functional would reference a hypothetical condition. A hypothetical condition refers to an assumption made about a property that is not necessarily true or currently applicable but is necessary for the appraisal process. This could include assuming that certain repairs are made or that a property is in a certain state when, in reality, it has known defects or issues.

By utilizing a hypothetical condition, the appraiser can provide a value estimate based on these assumed circumstances. This allows the appraisal to address potential scenarios and helps in understanding how the property might perform under different conditions. This approach is essential when the goal is to evaluate the property's value as if it existed without certain known issues, thus providing a broader perspective for investors or buyers.

In contrast, the other options pertain to different concepts within the appraisal process. A documented condition involves actual data or facts that are verifiable, while a presumed condition implies a level of truth without confirmation. An assumed condition often relates to accepted standards or practices in appraisal that are generally held true, but in this case, it is the hypothetical aspect that accurately captures the essence of the appraiser's assumption regarding the functionality of the property despite its known issues.