An appraiser rates the support for each approach on a points scale (sales comparison 3 points, cost 2 points, income 1 point) and converts the points into weights in proportion to the 6-point total. The indications are sales comparison $715,000, cost $760,000 and income $690,000. What is the weighted indication, rounded to the nearest dollar?
Correct Answer
D) $725,833
The weights are 3/6, 2/6 and 1/6, so the indication is (3 x $715,000 + 2 x $760,000 + 1 x $690,000) / 6 = $4,355,000 / 6 = $725,833. $714,167 swaps the cost and income points, $717,500 reverses the point order, and $721,667 is the simple average that ignores the ratings.
Why This Is the Correct Answer
Option D is correct because the points convert to weights of 3/6, 2/6 and 1/6, and (2,145,000 + 1,520,000 + 690,000) / 6 = $725,833. Sales comparison, rated best supported, carries half the weight.
Why the Other Options Are Wrong
Option A: $714,167
Option A, $714,167, gives cost 1 point and income 2 points, the reverse of the stated ratings: (2,145,000 + 760,000 + 1,380,000) / 6. With cost at 2 points and income at 1, the result is $725,833.
Option B: $717,500
Option B, $717,500, reverses the whole scale so income gets 3 points and sales comparison 1: (715,000 + 1,520,000 + 2,070,000) / 6. That gives the least-supported approach the most weight.
Option C: $721,667
Option C, $721,667, is the simple average of the three indications. It discards the ratings the appraiser developed; applying them gives $725,833.
Points over total equals weight
Divide each approach's points by the sum of all points to get its weight, then multiply and add.
How to use: Use this when a stem gives scores, ranks or ratios instead of percentages.
Exam Tip
Re-read which approach gets which score before computing; mismatching them is the common error.
Common Mistakes to Avoid
- -Assigning the scores to the wrong approaches
- -Averaging the indications and ignoring the scores
- -Treating raw points as percentages without dividing by the total
Concept Deep Dive
Analysis
This tests turning a qualitative ranking of data quality into numerical weights. The points must be divided by their total to become weights, matched to the right approaches, and then applied. The distractors come from mismatching points to approaches or ignoring them.
Background Knowledge
Reconciliation analyzes the appropriateness of each approach, the accuracy of its data and calculations, and the quantity of data. A points rating is one way to record that judgment, and a weighted average converts it into a figure by multiplying each indication by its share of the total points.
Real-World Application
An appraiser documenting a reconciliation for a lender scores each approach on data quantity and reliability. The scores of 3, 2 and 1 become weights of 50%, 33% and 17%, and the report explains why sales comparison scored highest.
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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