Only the sales comparison approach could be credibly developed, and it indicates $265,000. What does reconciliation involve in this assignment?
Correct Answer
A) Testing whether the single indication is credible for the intended use
Why this is correct: reconciliation is a judgment about the quality and quantity of evidence, and that judgment still has to be made when the evidence comes from one approach. Why the other choices are wrong: a single indication still has to be weighed rather than simply reported; a client estimate is not evidence of value and averaging with it breaches impartiality; and developing approaches the data cannot support produces indications that then have to be discarded.
Why This Is the Correct Answer
Why this is correct: reconciliation is a judgment about the quality and quantity of evidence, and that judgment still has to be made when the evidence comes from one approach. Why the other choices are wrong: a single indication still has to be weighed rather than simply reported; a client estimate is not evidence of value and averaging with it breaches impartiality; and developing approaches the data cannot support produces indications that then have to be discarded.
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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