At what levels is reconciliation performed in an appraisal that develops more than one approach?
Correct Answer
B) Within an approach and among the approaches
Reconciliation is performed both within a value approach, to produce a single estimate for that approach, and among the approaches to reach the final value estimate.
Why This Is the Correct Answer
Option B is correct because reconciliation is performed both within a value approach, to produce a single estimate for that approach, and among the approaches to reach the final value estimate. For example, several adjusted sale prices are reconciled into one sales comparison indication, and then the approach indications are reconciled into the final opinion.
Why the Other Options Are Wrong
Option A: Among approaches, and not within a single approach
Option A is wrong because it says reconciliation happens among approaches and not within a single approach. Reconciliation also takes place within an approach, such as resolving several adjusted comparables into one indication.
Option C: Within the sales comparison approach alone
Option C is wrong because reconciliation is not limited to the sales comparison approach alone. It applies within the cost and income approaches as well and among all approaches developed.
Option D: Between the subject and each comparable alone
Option D is wrong because comparing the subject with each comparable alone describes the adjustment process, not the full scope of reconciliation. Reconciliation then resolves those results within the approach and across approaches.
Inside, then across
Reconcile inside each approach to get one number per approach, then reconcile across approaches to get the final value.
How to use: Use this when a question asks where or when reconciliation occurs.
Exam Tip
Watch for answers that limit reconciliation to one stage or one approach. The full answer includes both the within-approach and among-approach levels.
Common Mistakes to Avoid
- -Thinking reconciliation only happens at the end among approaches
- -Confusing comparable adjustments with the full reconciliation process
- -Believing reconciliation is unique to the sales comparison approach
Concept Deep Dive
Analysis
This question tests the scope of reconciliation. Reconciliation is not only the final step among approaches; it also happens inside each approach, where the appraiser resolves multiple adjusted comparables or methods into one indication for that approach. The correct choice captures both levels.
Background Knowledge
Within the sales comparison approach, the appraiser reconciles the adjusted prices of the comparables into one indication. Within the income approach, the appraiser may reconcile results from different capitalization methods. The final reconciliation then weighs the approach indications to reach the value conclusion.
Real-World Application
An appraiser has four adjusted comparables ranging from $318,000 to $332,000 and reconciles them to a $325,000 sales comparison indication, giving most weight to the closest sale. The appraiser then reconciles that figure with the cost indication to reach the final opinion.
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?
People Also Study
Real Estate Market
13.6% of exam
Property Description
11.8% of exam
Land or Site Valuation
4.5% of exam
Sales Comparison Approach
16.4% of exam
Cost Approach
13.6% of exam
Previous Question
Three approaches have been developed. What is the best basis for assigning relative weights?
Next Question
Under Fannie Mae's Selling Guide, a comparable sold for $400,000. The seller paid $8,000 of the buyer's closing costs, and market analysis shows the price rose by that amount. Other market-supported adjustments are time +$12,000, GLA +$28,000, condition -$4,000 and garage +$12,000. What is the net adjustment percentage, measured against the sale price?