After adjusting five comparable sales, the appraiser must resolve them into a single indication. What is this step called?
Correct Answer
D) Reconciliation within the approach
Reconciling adjusted indications from several comparable sales occurs within the sales-comparison approach. Reconciliation also occurs at the final stage across developed approaches. The level of analysis, rather than merely the number of figures, distinguishes the two steps.
Why This Is the Correct Answer
Option D is correct because combining the adjusted indications of several comparable sales into one indicated value takes place within the sales comparison approach. Reference guidance describes this step as reconciling the value indicators from the group of comparable sales into a single value indicator for the subject. It is separate from the final reconciliation, which weighs the indications of the different approaches.
Why the Other Options Are Wrong
Option A: The final reconciliation of the assignment
Option A, the final reconciliation of the assignment, is the later step that weighs the indications from the developed approaches to reach the final value opinion. Resolving five comparable sales into one figure happens earlier, inside a single approach.
Option B: An allocation among property components
Option B, an allocation among property components, divides a total value among parts such as land and improvements. It does not combine several comparable sale indications into one indication.
Option C: A verification of the comparable sale data
Option C, a verification of the comparable sale data, confirms the facts of each sale before adjustment. The question describes the step after adjustment, when the adjusted figures are resolved into one indication.
Inside first, then across
Reconcile inside the approach first (comparables into one indication), then across the approaches (indications into one opinion).
How to use: Use this when a question asks which reconciliation step is being described.
Exam Tip
Look at what is being combined: comparables from one approach point to reconciliation within the approach, while indications from different approaches point to final reconciliation.
Common Mistakes to Avoid
- -Calling any combination of figures the final reconciliation
- -Confusing reconciliation with allocation of value between land and improvements
- -Thinking the number of figures, not the level of analysis, defines the step
Concept Deep Dive
Analysis
This question tests whether you can tell the two levels of reconciliation apart. Resolving several adjusted comparable sales into one indication happens inside the sales comparison approach, before any comparison across approaches. The deciding clue is the level of analysis: the figures being resolved all come from one approach.
Background Knowledge
Reconciliation happens at two levels in an appraisal. Within an approach, the appraiser weighs the adjusted indications from comparables to reach one indication for that approach. In the final reconciliation, the appraiser weighs the indications from the approaches used to reach the final value opinion.
Real-World Application
An appraiser adjusts five sales of similar ranch houses and gets indications from $412,000 to $425,000. She gives the most weight to the two sales with the smallest net adjustments and settles on $418,000 as the sales comparison indication. Later she weighs that figure against the cost approach in the final reconciliation.
More Reconciliation Questions
In a cost approach for an improved property, an appraiser estimates site value by sales comparison, allocation and extraction, then settles on one site-value figure before final reconciliation. How is this step best described?
An extraordinary assumption was reasonably supported, properly used and disclosed in an appraisal report. Later, the assumed information is found to be false. Which conclusion is best supported?
An otherwise applicable valuation approach cannot be developed reliably from the available data. The remaining scope can produce credible assignment results. What should the appraiser do?
May an appraiser use a hypothetical condition in any assignment?
An appraisal has a current effective date and permits an extraordinary assumption if its requirements are met. Which situation involves uncertain information rather than a fact known to be contrary to reality on that date?
Why must a report identify any real property interest that is being excluded from the value opinion?
Which review best helps explain divergent cost, sales-comparison and income indications?
Two value indications are $340,000 and $392,000. What is the difference as a percentage of the lower indication, rounded to one decimal place?
An unauthorized third party requests a lender-client’s report. No due-process or other permitted disclosure exception applies. How should the appraiser respond?
An appraiser proposes to assume there are no hidden defects. Which fact would characterize that assumption as extraordinary under the USPAP 2024 definition, rather than justify dismissing it as routine boilerplate?
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