In reconciliation, what does the relevance of an approach refer to?
Correct Answer
A) How well it reflects how such buyers actually behave
Why this is correct: In reconciliation, the relevance of an approach refers to how well it reflects the decision-making process of typical buyers for that property type. For example, income-producing properties are valued by investors based on income, making the income approach highly relevant. Why the other choices are wrong: How many comparable sales the appraiser located relates to data quantity, not relevance. How closely its indication matches the other two is a convergence issue, not relevance. How recently the underlying data was collected relates to data timeliness, not relevance. Exam tip: Relevance asks: 'Do buyers for this property type actually think this way?'
Why This Is the Correct Answer
Why this is correct: In reconciliation, the relevance of an approach refers to how well it reflects the decision-making process of typical buyers for that property type. For example, income-producing properties are valued by investors based on income, making the income approach highly relevant. Why the other choices are wrong: How many comparable sales the appraiser located relates to data quantity, not relevance. How closely its indication matches the other two is a convergence issue, not relevance. How recently the underlying data was collected relates to data timeliness, not relevance. Exam tip: Relevance asks: 'Do buyers for this property type actually think this way?'
More Reconciliation Questions
Reconciliation of the approaches to value is best described as which activity?
Why should the reconciliation address the quantity of evidence as well as its quality?
How long must a report be retained compared with the workfile?
What distinguishes an appraisal review from an appraisal?
An appraiser reconciles to a value at the top of the indicated range because the client needs that figure. What has occurred?
What does it mean that a value opinion must be reasonable rather than merely arithmetically derived?
What should the reconciliation section explain to the reader?
How do the content obligations of the two report options differ with respect to the information analyzed?
The three approaches indicate $480,000, $495,000 and $610,000. What should the appraiser do first?
Three approaches indicate $1.02 million, $1.05 million and $1.04 million. How should this be reported?
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