For a 24-unit apartment building, the appraiser finds numerous sales of closely comparable buildings with well-confirmed prices, but reliable income and expense data from just two comparable properties. How should the sales comparison and income indications be weighed?
Correct Answer
A) Give the sales comparison indication greater weight, given its larger body of confirmed data.
Quantity of data is a reconciliation criterion: an indication should rest on enough data to give it reasonable support. With numerous well-confirmed sales but limited income and expense data, greater weight can logically go to the sales comparison indication even for an income-producing property. Favoring income because apartments are bought for income ignores how thin its data are here.
Why This Is the Correct Answer
Option A is correct because the sales comparison indication rests on numerous closely comparable, well-confirmed sales, while the income indication rests on data from just two properties. Greater weight can logically go to the indication with the substantially larger quantity of reliable data.
Why the Other Options Are Wrong
Option B: Give the income indication greater weight, because apartment buyers purchase for income.
Option B gives the income indication greater weight because apartment buyers purchase for income. That makes the income approach applicable, but the stem says its data are limited, and quantity of data is also a reconciliation criterion.
Option C: Give both indications equal weight, because each approach applies to apartment buildings.
Option C gives both indications equal weight because each approach applies to apartments. Applicability is one criterion; the large difference in the quantity of supporting data justifies unequal weights.
Option D: Rely on the income indication and use the sales as a test of its reasonableness.
Option D relies on the income indication and uses the sales only as a check. That reverses the evidence: the sales are the better-supported indication in this market, so they should carry more of the conclusion.
Relevance needs volume
An approach can fit the property perfectly and still be thinly supported. Weight follows both fit and the depth of the evidence.
How to use: Use this when a stem pairs a property type that suggests one approach with data that are much stronger for another.
Exam Tip
Do not assume income-producing property means the income approach wins; read the stem for the amount and reliability of each approach's data.
Common Mistakes to Avoid
- -Weighting by property type alone without checking the data behind each approach
- -Giving equal weight because both approaches were applicable
- -Treating a thinly supported indication as the primary one
Concept Deep Dive
Analysis
The question tests whether the candidate weighs data quantity alongside the property type. Apartments are bought for income, which makes the income approach relevant, but relevance does not outweigh a thin data base. When the sales evidence is plentiful and well confirmed and the income data are limited, the sales indication has more support.
Background Knowledge
Reconciliation criteria include the appropriateness of each approach, the accuracy of its data and adjustments, and the quantity of data available. An approach suited to the property type can still deserve less weight if few data support it. The appraiser explains the weights in light of all these criteria.
Real-World Application
In a city with active apartment trading, an appraiser finds a dozen confirmed sales of similar buildings but only two owners willing to share operating statements. The appraiser develops both approaches and places greater weight on sales comparison, explaining the limited income data.
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