How should an appraiser reconcile indications when the market is unusually volatile?
Correct Answer
B) Weigh recency alongside comparability and data
Why this is correct: In volatile markets, recent sales are highly relevant, but the appraiser must still consider all traditional reconciliation criteria, including comparability (similarity to the subject) and the quality of the data itself. Why the other choices are wrong: 'Adopt the most recent indication automatically' ignores other important factors like property similarity. 'Rely only on sales from the past thirty days' may be too restrictive if those sales are not comparable. 'Widen the conclusion until it covers all figures' is not a proper reconciliation technique; the appraiser must derive a specific opinion. Exam tip: In volatile markets, give significant weight to the market conditions adjustment and support it with clear data.
Why This Is the Correct Answer
Why this is correct: In volatile markets, recent sales are highly relevant, but the appraiser must still consider all traditional reconciliation criteria, including comparability (similarity to the subject) and the quality of the data itself. Why the other choices are wrong: 'Adopt the most recent indication automatically' ignores other important factors like property similarity. 'Rely only on sales from the past thirty days' may be too restrictive if those sales are not comparable. 'Widen the conclusion until it covers all figures' is not a proper reconciliation technique; the appraiser must derive a specific opinion. Exam tip: In volatile markets, give significant weight to the market conditions adjustment and support it with clear data.
More reconciliation Questions
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Reconciliation of the approaches to value is best described as which activity?
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Which of the following is a written report option named in the current edition of USPAP?
What distinguishes qualitative from quantitative analysis in the sales comparison approach?
Why should the reconciliation address the quantity of evidence as well as its quality?
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