An appraiser reconciles sales comparison ($450,000) and cost ($470,000) at 70% and 30%, for a final value of $456,000. Within the sales comparison approach, Comparable 2 carries 40% of the weight. The appraiser then finds a $12,000 adjustment error that overstated Comparable 2's adjusted price; nothing else changes. What is the corrected final value?
Correct Answer
D) $452,640
The error flows through both weighting levels: the sales comparison indication falls by 40% x $12,000 = $4,800 to $445,200, and the final value falls by 70% of that, so 0.70 x $445,200 + 0.30 x $470,000 = $452,640. $444,000 subtracts the full $12,000 from the final value, $447,600 applies only the 70% approach weight, and $451,200 applies only the 40% comparable weight.
Why This Is the Correct Answer
Option D is correct because the $12,000 error moves the sales comparison indication by only Comparable 2's 40% share, or $4,800, to $445,200. The final value then moves by 70% of that change: 0.70 x 445,200 + 0.30 x 470,000 = $452,640, which is $3,360 below the original $456,000.
Why the Other Options Are Wrong
Option A: $444,000
Option A, $444,000, subtracts the full $12,000 error from the final value (456,000 - 12,000). Comparable 2 is only 40% of the sales comparison indication, and that indication is only 70% of the final value, so the true effect is 0.40 x 0.70 x 12,000 = $3,360.
Option B: $447,600
Option B, $447,600, applies the 70% approach weight to the whole error (456,000 - 8,400) but forgets that Comparable 2 carries only 40% of the weight within the sales comparison approach. The correct drop is $3,360, giving $452,640.
Option C: $451,200
Option C, $451,200, applies Comparable 2's 40% weight (456,000 - 4,800) but forgets that the sales comparison indication receives only 70% of the final weight. Including both weights gives $452,640.
Multiply through every weight
An error in one comparable reaches the final value only after it is multiplied by the comparable's weight and then by the approach's weight.
How to use: Use this whenever a stem asks how a correction to one sale or one approach changes a final weighted value.
Exam Tip
Trace the change level by level and write each weight down; skipping one weight is the usual trap.
Common Mistakes to Avoid
- -Subtracting the full error from the final value
- -Applying only the approach weight and ignoring the comparable's weight
- -Applying only the comparable's weight and ignoring the approach weight
Concept Deep Dive
Analysis
This tests how a change in one comparable passes through two levels of weighting: reconciliation within the sales comparison approach, then reconciliation among the approaches. The effect on the final value is the error times both weights. Candidates who apply only one weight, or none, land on the distractors.
Background Knowledge
Reconciliation happens at two levels: indications from individual comparables are resolved within the sales comparison approach, and the approach indications are then reconciled into a final value. A weighted average is linear, so a change in any input moves the result by that change times its weight at each level.
Real-World Application
During review, an appraiser discovers that a garage adjustment on one sale was entered twice. Rather than reworking the whole report from scratch, the appraiser recomputes the weighted sales indication, then the final reconciliation, and documents the corrected figures.
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