In reconciling the sales comparison approach, an appraiser has five adjusted indications. What matters most in weighing them?
Correct Answer
A) The total dollar amount of gross adjustments made
Why this is correct: The total gross adjustment amount is a primary indicator of a comparable's similarity to the subject. A sale requiring fewer and smaller adjustments is generally more reliable and should be given more weight in the reconciliation. Why the other choices are wrong: The order of inspection is irrelevant. The number of comparables alone does not determine reliability. While indications clustering around one figure can be supportive, the magnitude of adjustments is a more direct measure of comparability. Exam tip: In reconciliation, comparables with the smallest total gross adjustments are typically considered the most reliable and receive the greatest weight.
Why This Is the Correct Answer
Why this is correct: The total gross adjustment amount is a primary indicator of a comparable's similarity to the subject. A sale requiring fewer and smaller adjustments is generally more reliable and should be given more weight in the reconciliation. Why the other choices are wrong: The order of inspection is irrelevant. The number of comparables alone does not determine reliability. While indications clustering around one figure can be supportive, the magnitude of adjustments is a more direct measure of comparability. Exam tip: In reconciliation, comparables with the smallest total gross adjustments are typically considered the most reliable and receive the greatest weight.
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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