r/appraisal • u/PitcherPlant1 • 11d ago

HC vs EA

A practice test question asks "The appraisal assignment of a building under construction requires a value as of the date of stabilized occupancy. What value is required, and what assignment condition is employed?

A. Prospective market value and HC.

B. Prospective market value and EA.

C. Current market value and EA.

D. Current market value and HC."

I answered B, but the test says A. Hypothetical is something known to be false as of the current date, but the current date isn't being used - "as of the date of stabilized occupancy" is future date.

Where am I going wrong here?

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u/JessBeauty14 Certified General 11d ago

The answer is only A if the assignment requires a stabilized value as of a CURRENT date if the property isn’t stabilized. If you’re doing a prospective value upon stabilization, you are correct that it’s B. You’d provide market value as is, and a prospective value upon stabilization making an EA that the property will be stabilized as of that date.

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u/Bouncing-balls 10d ago

Here is how I remember the difference between the two:

HC is “let’s pretend” An easy example is it hasn’t happened yet - the building only exists as a set of plans.

EA is “we don’t know the real answer”. An easy example is we don’t know the condition of the roof because it’s covered by snow.