The three approaches to value indicate $525,000, $490,000 and $505,000. The appraiser assigns them weights of 60%, 25% and 15%, respectively. What is the weighted indication, rounded to the nearest dollar?
Correct Answer
D) $513,250
Use the specified matching order: $525,000 × 0.6 + $490,000 × 0.25 + $505,000 × 0.15 = $513,250.00. Rounded to the nearest dollar, this is $513,250. These are assigned arithmetic weights. Actual reconciliation requires a reasoned analysis of applicability and data reliability; property type alone does not prescribe this numerical weighting.
Why This Is the Correct Answer
Option D is correct because $525,000 × 0.60 = $315,000, $490,000 × 0.25 = $122,500, and $505,000 × 0.15 = $75,750. Adding them gives $315,000 + $122,500 + $75,750 = $513,250. The result is already a whole dollar amount.
Why the Other Options Are Wrong
Option A: $506,667
Option A, $506,667, is the simple average: ($525,000 + $490,000 + $505,000) ÷ 3 = $1,520,000 ÷ 3 = $506,667. It ignores the 60%, 25% and 15% weights; the weighted result is $513,250.
Option B: $525,000
Option B, $525,000, is just the first indication, which carries the largest weight. A 60% weight does not make it the whole answer; the weighted sum is $513,250.
Option C: $437,500
Option C, $437,500, comes from adding only the first two components ($315,000 + $122,500 = $437,500) and omitting the third, $505,000 × 0.15 = $75,750. Including it gives $513,250.
Match, multiply, then sum
Match each weight to its indication in the stated order, multiply each pair, and add all the products.
How to use: Use this when weights are listed in the same order as the indications.
Exam Tip
Count your products before adding. A result that equals one indication or the plain average signals that the weights were not applied correctly.
Common Mistakes to Avoid
- -Using a simple average instead of the weights
- -Leaving out the smallest weighted component
- -Matching weights to the wrong indications
Concept Deep Dive
Analysis
This question tests weighted-indication arithmetic with weights matched to indications in a stated order. Multiply each indication by its matching weight and add the products. The weights are stated in the facts and do not represent a rule for any property type.
Background Knowledge
A weighted average applies percentage weights that total 100% to each indication and sums the results. In practice, weights should reflect each approach's applicability and data reliability, and the final opinion should be reasoned rather than purely formulaic.
Real-World Application
An appraisal trainee prepares a reconciliation grid showing three indications with percentage weights. The supervisor recalculates the weighted figure and then asks the trainee to write the narrative explaining why the sales comparison indication earned 60% weight.
More Reconciliation Questions
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