What is a "statement of assumptions and limiting conditions" in appraisals?

A "statement of assumptions and limiting conditions" serves as a critical component in appraisals by outlining the foundational premises the appraiser has relied upon as well as the constraints affecting the valuation. This statement provides transparency to the clients and stakeholders about the context in which the appraisal was conducted.

By explicitly listing the assumptions—such as property condition, market conditions, and intended use of the appraisal—the statement helps manage expectations and defines the scope of the appraisal’s validity. Additionally, the limiting conditions delineate factors that may restrict the extent of the appraisal results. For example, if the appraisal is based on a façade inspection rather than an in-depth analysis, this would be noted to clarify the depth of the evaluation.

This documentation is essential, as it ensures that all parties involved understand the parameters under which the appraisal was completed, allowing for informed decision-making.

The other options, while they each address different aspects of appraisals, do not capture the essence of the statement of assumptions and limiting conditions. Summaries of the appraisal process, demographic explanations, and reports on qualifications serve distinct purposes but do not focus on the necessary assumptions and constraints that guide the validity of the appraisal itself.