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?
Correct Answer
A) About $398,000, with little or no weight on the income indication
The greatest weight goes to the approach that best measures the benefits buyers seek. Owner-occupants buy for use, the three sales are tight and verified, and the income indication is weak, so the conclusion centers on the sales evidence.
Why This Is the Correct Answer
Option A is correct because the greatest weight belongs to the approach that most reliably measures the benefits buyers in the subject's market seek. Owner-occupants are motivated by use, and the three verified sales adjusting to $395,000, $398,000 and $401,000 average (395,000 + 398,000 + 401,000) / 3 = $398,000. The income indication of $350,000 rests on a single questionable rent, so it merits little or no weight.
Why the Other Options Are Wrong
Option B: About $386,000, the simple average of all four indications
Option B's $386,000 is the simple average of all four indications: (395,000 + 398,000 + 401,000 + 350,000) / 4 = $386,000. That gives the weak, poorly supported income figure the same weight as each verified sale, which ignores reliability; the sales evidence supports about $398,000.
Option C: About $374,000, halfway between the sales and the income figures
Option C's $374,000 is the midpoint between the sales mean and the income figure: (398,000 + 350,000) / 2 = $374,000. Splitting the difference gives a questionable income indication equal weight with tight, verified sales, which does not reflect how owner-occupants buy; the supported conclusion is about $398,000.
Option D: About $388,400, weighting sales 80% and income 20% since both approaches were developed
Option D's $388,400 comes from 398,000 x 0.80 + 350,000 x 0.20 = 318,400 + 70,000 = $388,400. Developing an approach does not earn it weight; a 20% weight on an income figure resting on one questionable rent is not supported, so the conclusion should center on the $398,000 sales evidence.
Weight follows the buyer
Ask who buys this property and why; the approach that mirrors that buyer's reasoning, backed by solid data, earns the most weight.
How to use: Use this whenever a question asks which indication should dominate a reconciliation.
Exam Tip
When answer choices offer simple averages or midpoints, check whether the facts describe one indication as weak; weighting a weak indication equally is usually the trap.
Common Mistakes to Avoid
- -Averaging all indications equally regardless of data quality
- -Giving weight to an approach simply because it was developed
- -Splitting the difference between a strong and a weak indication
Concept Deep Dive
Analysis
This question tests whether you weight indications by how well they reflect the benefits typical buyers seek and by the reliability of their data. Owner-occupants buy homes for use, so sales of competing homes measure their behavior directly. Three tight, verified sales clustered around $398,000 deserve primary weight, while an income figure built on one questionable rent deserves little or none.
Background Knowledge
Reconciliation weighs each indication by its applicability to the property and the quality of its supporting data. For owner-occupied homes, sales comparison usually best mirrors buyer behavior, while income analysis depends on reliable market rents and multipliers. An indication can be developed and still deserve little or no weight if its inputs are weak.
Real-World Application
An appraiser values a single-family home in a neighborhood where nearly all homes are owner-occupied and finds three recent verified sales of similar homes. A rental analysis relies on one listing of uncertain comparability. The appraiser concludes near the sales evidence and explains why the income indication received minimal weight.
More Reconciliation Questions
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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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