Indications are sales comparison $612,000, cost $648,000 and income $590,000, weighted 60%, 25% and 15%. After review, the appraiser moves 10 percentage points of weight from cost to sales comparison (70%, 15%, 15%). What is the change in the reconciled value?
Correct Answer
A) -$3,600
Moving weight from one approach to another changes the result by the weight moved times the difference between the two indications: 0.10 x ($612,000 - $648,000) = -$3,600 (from $617,700 to $614,100). -$360 treats 10 points as 1%, +$2,200 moves the weight from income instead of cost, and +$61,200 counts only the weight added to sales comparison.
Why This Is the Correct Answer
Option A is correct because 10 points of weight move from the $648,000 cost indication to the $612,000 sales indication, so the result changes by 0.10 x (612,000 - 648,000) = -$3,600. Recomputing in full confirms it: $617,700 before and $614,100 after.
Why the Other Options Are Wrong
Option B: -$360
Option B, -$360, treats the 10-point shift as 0.01 instead of 0.10. The shift is ten percentage points, so 0.10 x (612,000 - 648,000) = -$3,600.
Option C: +$2,200
Option C, +$2,200, computes 0.10 x (612,000 - 590,000), as if the weight came from the income approach. The stem moves weight from cost, whose $648,000 indication is above sales comparison, so the value falls by $3,600.
Option D: +$61,200
Option D, +$61,200, counts only the weight added to sales comparison: 0.10 x $612,000 = $61,200. It ignores the matching 0.10 x $648,000 = $64,800 removed from cost, so the net change is -$3,600.
Shift times gap
Change in value = weight moved x (receiving indication minus giving indication). Moving weight toward a lower indication lowers the value.
How to use: Use this to answer any 'what happens if the weight changes' question without recomputing the whole average.
Exam Tip
Check the sign by asking whether weight is moving toward a higher or a lower indication.
Common Mistakes to Avoid
- -Counting the weight added to one approach without removing it from the other
- -Using the wrong approach as the source of the shifted weight
- -Treating percentage points as a decimal one place off
Concept Deep Dive
Analysis
The question tests the effect of changing a weight. Because a weighted average is linear, shifting weight between two approaches moves the result by the weight shifted times the gap between their indications. Candidates must identify which approach loses weight and get the sign right.
Background Knowledge
The final value is not a simple average; approaches with greater significance receive greater weight. Knowing how a weight change moves the result helps an appraiser and a reviewer see how sensitive the conclusion is to the weighting judgment.
Real-World Application
After a reviewer questions the cost approach's depreciation support, an appraiser reduces its weight by 10 points in favor of sales comparison. The report notes that the change lowers the reconciled value by $3,600 and explains why sales comparison now deserves more reliance.
More Reconciliation Questions
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An otherwise applicable valuation approach cannot be developed reliably from the available data. The remaining scope can produce credible assignment results. What should the appraiser do?
May an appraiser use a hypothetical condition in any assignment?
An appraisal has a current effective date and permits an extraordinary assumption if its requirements are met. Which situation involves uncertain information rather than a fact known to be contrary to reality on that date?
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Which review best helps explain divergent cost, sales-comparison and income indications?
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An appraiser proposes to assume there are no hidden defects. Which fact would characterize that assumption as extraordinary under the USPAP 2024 definition, rather than justify dismissing it as routine boilerplate?
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