In a sales comparison analysis, an appraiser applies a +$24,500 adjustment for a swimming pool to Comparable A, then later applies a −$18,200 adjustment for inferior HVAC to the same comparable. The appraiser reports a net adjustment of +$6,300. During peer review, it is noted that the pool adjustment was derived from a single sale pair involving a luxury estate, while the HVAC adjustment came from a cluster of mid-range transactions. What is the primary analytical deficiency?
Correct Answer
A) Failure to weight adjustments by reliability, violating the reconciliation requirement of SR 1-5.
Standards Rule 1-5 requires the appraiser to reconcile the value indications and explain the weighting given to each. When adjustments rely on data of disparate reliability (e.g., one pair vs. multiple sales), the appraiser must acknowledge and account for that disparity in reconciliation—not merely sum adjustments arithmetically. Reporting a simple net of +$6,300 obscures the weaker support for the pool adjustment and fails to demonstrate reasoned reconciliation per SR 1-5. Option A correctly identifies the deficiency. Option B is incorrect: these *are* net (individual) adjustments. Option C is irrelevant—the question involves only dollar adjustments. Option D cites a nonexistent '±5%' threshold; USPAP sets no numeric limits on adjustment magnitude.
Why This Is the Correct Answer
Standards Rule 1-5 requires the appraiser to reconcile the value indications and explain the weighting given to each. When adjustments rely on data of disparate reliability (e.g., one pair vs. multiple sales), the appraiser must acknowledge and account for that disparity in reconciliation—not merely sum adjustments arithmetically. Reporting a simple net of +$6,300 obscures the weaker support for the pool adjustment and fails to demonstrate reasoned reconciliation per SR 1-5. Option A correctly identifies the deficiency. Option B is incorrect: these *are* net (individual) adjustments. Option C is irrelevant—the question involves only dollar adjustments. Option D cites a nonexistent '±5%' threshold; USPAP sets no numeric limits on adjustment magnitude.
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