How should regression-derived adjustments be treated in an appraisal report?
Correct Answer
C) Tested against other market evidence for sense
Why this is correct: Regression-derived adjustments should be tested against other market evidence for sense. A statistical coefficient is an estimate that must be reconciled with actual market behavior, such as paired sales analysis or cost data, to ensure it is reasonable and supported. Why the other choices are wrong: They should not be adopted without comment, as they are not purely objective; they depend on model specification. They are not used only where no paired sales are available; they can be used alongside other evidence. They should not be reported as the sole basis for the conclusion without corroboration. Exam tip: Never blindly accept a regression output. Always ask: 'Does this adjustment make sense based on other market evidence I've seen?'
Why This Is the Correct Answer
Why this is correct: Regression-derived adjustments should be tested against other market evidence for sense. A statistical coefficient is an estimate that must be reconciled with actual market behavior, such as paired sales analysis or cost data, to ensure it is reasonable and supported. Why the other choices are wrong: They should not be adopted without comment, as they are not purely objective; they depend on model specification. They are not used only where no paired sales are available; they can be used alongside other evidence. They should not be reported as the sole basis for the conclusion without corroboration. Exam tip: Never blindly accept a regression output. Always ask: 'Does this adjustment make sense based on other market evidence I've seen?'
More appraisal-statistical-methods Questions
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