Adjusted sales of $402,000, $410,000 and $396,000 are weighted 50%, 30% and 20% within the sales comparison approach. The cost approach indicates $420,000. If the final reconciliation gives 80% weight to sales comparison and 20% to cost, what is the final value?
Correct Answer
C) $406,560
Within the approach: $201,000 + $123,000 + $79,200 = $403,200. Final: $403,200 × 0.80 + $420,000 × 0.20 = $322,560 + $84,000 = $406,560.
Why This Is the Correct Answer
Option C is correct because the within-approach result is 402,000 x 0.50 + 410,000 x 0.30 + 396,000 x 0.20 = 201,000 + 123,000 + 79,200 = $403,200. The final reconciliation is 403,200 x 0.80 + 420,000 x 0.20 = 322,560 + 84,000 = $406,560. Both levels must be completed to reach the final value.
Why the Other Options Are Wrong
Option A: $403,200
Option A's $403,200 is only the weighted sales comparison indication (201,000 + 123,000 + 79,200). It stops after the first level and does not apply the 80% and 20% final weights, which give 322,560 + 84,000 = $406,560.
Option B: $416,640
Option B's $416,640 swaps the final weights: 403,200 x 0.20 + 420,000 x 0.80 = 80,640 + 336,000 = $416,640. The stem gives 80% to sales comparison, so the correct figure is 403,200 x 0.80 + 420,000 x 0.20 = $406,560.
Option D: $411,600
Option D's $411,600 uses equal weights: (403,200 + 420,000) / 2 = $411,600. The stem assigns 80% and 20%, which gives 322,560 + 84,000 = $406,560.
Inside first, then across
Finish the weighted sales indication before touching the final weights, then apply each weight to the matching approach.
How to use: Use this on any multi-step reconciliation calculation.
Exam Tip
After calculating, check that the largest weight went to the indication the stem names; swapped weights are a common distractor.
Common Mistakes to Avoid
- -Stopping after the within-approach reconciliation
- -Applying the 80% weight to the cost approach
- -Using a simple average instead of the stated weights
Concept Deep Dive
Analysis
This question tests two-level reconciliation: first within the sales comparison approach, then across approaches. You compute the weighted sales indication, then weight that result against the cost indication. Distractors come from stopping early, swapping weights or using equal weights.
Background Knowledge
Reconciliation occurs within an approach to produce a single indication and again across approaches to reach the final value. Weighted averages multiply each component by its assigned weight and add the products. Weights should reflect the appraiser's supported judgment about reliability.
Real-World Application
An appraiser weights three adjusted comparables based on their similarity to the subject to reach a sales comparison indication. The appraiser then gives that indication most weight against a cost approach for a newer home. The report shows both steps so a reviewer can follow the math.
More Reconciliation Questions
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