For a new suburban house, verified competitive sales provide stronger market evidence than the available cost and income inputs. Which indication should receive most weight?
Correct Answer
C) Sales comparison, because its stated evidence is strongest.
Verified competitive sales deserve greatest weight under the stated relative support. New construction can make cost analysis useful, but age and property category do not prescribe weights. The income and cost indications should still be evaluated and their treatment explained.
Why This Is the Correct Answer
Option C is correct because, with adequate and reliable data, the greatest reliance should be placed on the indicator that best measures the subject's expected benefits. The stem says verified competitive sales give stronger market evidence than the cost and income inputs. The cost and income indications should still be evaluated and their treatment explained.
Why the Other Options Are Wrong
Option A: Cost, because new houses require the cost approach to control.
Option A says cost must control because new houses require it, but age does not prescribe the weights. New construction can make the cost approach useful, yet here the sales evidence is stated to be stronger.
Option B: Income, because it uses a mathematical model.
Option B favors income because it uses a mathematical model, but using a formula does not make an approach reliable. The stem says the income inputs are weaker than the sales evidence.
Option D: All approaches equally, because the house is newly built.
Option D gives all approaches equal weight because the house is newly built, but newness does not make the approaches equally reliable. Weight should follow the strength of the evidence.
Strongest evidence gets most weight
Give the most weight to the approach whose evidence is strongest for how buyers value the property.
How to use: Use this when a stem states which approach has the best data.
Exam Tip
When the stem tells you which evidence is strongest, choose the answer that follows that evidence rather than a rule based on age or property type.
Common Mistakes to Avoid
- -Assuming new construction requires the cost approach to control
- -Giving equal weights regardless of data strength
- -Favoring the income approach because it is formula-based
Concept Deep Dive
Analysis
This question tests weighting when one approach has clearly stronger evidence. If the appraiser has adequate and reliable data, the greatest reliance goes to the indicator that best measures the benefits the property is expected to yield. Here verified competitive sales are described as the strongest evidence, so sales comparison deserves most weight.
Background Knowledge
Weighting in reconciliation follows how applicable each approach is and how reliable its data are. For a typical owner-occupied house with good sales data, sales comparison often best reflects buyer behavior. The cost approach can still help for new construction, but it does not control by default.
Real-World Application
In a new subdivision with many recent resales of similar models, an appraiser has five close comparable sales. Her cost estimate depends on an uncertain entrepreneurial incentive, and few homes rent. She gives sales comparison most weight and explains why the other approaches received less.
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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Previous Question
In Assignment A, three well-supported indications fall within 1.5% of each other and the reconciled figure is $487,350. In Assignment B, the data are thin, the indications spread 15% apart, and the reconciled figure is $512,740. Which rounding treatment is best supported?
Next Question
An owner-occupied home has three verified sales adjusting to $395,000, $398,000 and $401,000; an income indication of $350,000 rests on one questionable rent. Which reconciliation best reflects the benefits buyers seek?