An appraiser first weighted sales comparison ($530,000) at 60%, cost ($565,000) at 25% and income ($480,000) at 15%. Further analysis shows the rent data are unreliable, so the income indication is dropped and the remaining weights are rescaled in their existing 60:25 proportion. What is the reconciled value, rounded to the nearest dollar?
Correct Answer
C) $540,294
Rescaling 60:25 to total 100% gives weights of 60/85 and 25/85, so the value is ($530,000 x 60 + $565,000 x 25) / 85 = $540,294. $531,250 keeps the original weights including income, $538,750 moves all 15 points to sales comparison, and $544,000 moves them all to cost, neither of which keeps the 60:25 proportion.
Why This Is the Correct Answer
Option C is correct because rescaling 60:25 gives weights of 60/85 and 25/85, and (31,800,000 + 14,125,000) / 85 = $540,294. The result keeps the appraiser's relative judgment between sales comparison and cost while removing the unreliable income indication.
Why the Other Options Are Wrong
Option A: $531,250
Option A, $531,250, keeps all three original weights (318,000 + 141,250 + 72,000). That still relies 15% on income data the appraiser found unreliable.
Option B: $538,750
Option B, $538,750, moves all 15 points to sales comparison (75% x 530,000 + 25% x 565,000). That changes the ratio to 75:25 rather than keeping 60:25.
Option D: $544,000
Option D, $544,000, moves all 15 points to cost (60% x 530,000 + 40% x 565,000). That changes the ratio to 60:40 rather than keeping 60:25.
Drop it, then rescale
Divide each remaining weight by the sum of the remaining weights so they total 100% again in the same proportion.
How to use: Use this when an approach is removed or given zero weight and the stem says to keep the others in proportion.
Exam Tip
Proportional rescaling means each remaining weight divided by the remaining total, here 85.
Common Mistakes to Avoid
- -Leaving weight on an approach found unreliable
- -Moving all removed weight to one approach when the stem calls for proportional rescaling
- -Forgetting to rescale so weights total 100%
Concept Deep Dive
Analysis
The question tests what happens to a weighted reconciliation when one approach is found unreliable and dropped. The remaining weights must be rescaled so they again total 100% in the stated proportion. The distractors come from not dropping the approach or reallocating its weight to one approach.
Background Knowledge
Reconciliation considers the accuracy of each approach's data and calculations and the quantity of data. When analysis shows an approach's data are unreliable, it may receive little or no weight, and the appraiser explains how the remaining weights were set.
Real-World Application
An appraiser discovers that the rent comparables for a single-family rental were all furnished short-term units. The income indication is set aside, and the sales comparison and cost weights are rescaled with an explanation of why.
More Reconciliation Questions
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