Extraordinary assumptions are something that every real estate appraiser needs to consider whether they should make them on every assignment. And honestly, you will see many real estate appraisers using extraordinary assumptions more often than not. The reason for this is most real estate tax abatement cases require the testimony of two appraisers. One appraiser works for the taxing authority, while the other will work for the taxpayer. On occasion, a third real estate appraiser is necessary when an opinion about reports prepared prior to the hearing is needed.
Since some real estate appraisers are considered experts in their field, they have a little more leeway with how they respond to the questions they are asked. These appraisers must be deemed an expert by the courts prior to giving their testimony though.
A prime example of how much leeway a real estate appraiser expert has is:
If a real estate appraiser uses information from a private research company to state the vacancy rate for a specific market area is X%, the information would be considered hearsay. In those scenarios, the person who wrote the report for the private research company would need to arrive at the court to testify.
Now, if a real estate appraiser expert shares the same information with the court, no one would question where they discovered their information. Therefore, no other witnesses would need to go to court to testify.
How Far Can an Appraiser Go When They Utilize Extraordinary Assumptions?
Many questions come up with exactly how far an expert real estate appraiser can go when they are utilizing extraordinary assumptions.
- Can an appraiser share their own opinion when they are talking about the cost to put a utility pole in the ground? – The answer is yes, they might be able to if they are a civil engineer or have similar qualifications.
- Can an appraiser talk about the additional cost for drilling those same poles into bedrock? – Again, the answer might be yes if the appraiser has the necessary qualifications.
- Can an appraiser determine how much bedrock would be in place during the replacement of the poles? – There is no way a person could actually know this information. Therefore, this is where extraordinary assumptions would be used to answer the question.
Real estate appraisers, even experts, need to be able to supply where they found their facts and other information if they are asked. They are also required to share why they are qualified to share those facts without the need to be questioned further or provide supplemental information.
If an appraiser cannot provide any of the above information, their entire testimony could be excluded from the hearing.
Of course, any information shared through testimony can be challenged. However, a challenge will not create a scenario where the entire testimony is removed. Unless it is discovered the information was false.
Extraordinary assumptions can be tricky to introduce in court. But expert real estate appraisers, who are qualified in the areas they are talking about, should never have an issue when they are testifying.
There are many other scenarios where extraordinary assumptions are used in real estate. If you have any questions about extraordinary assumptions, or other real estate issues, please contact me today.