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
The single sales indication can support the conclusion only if the assignment permits that scope and the evidence is sufficient for credible results. Explain omitted approaches and the basis for reliance. Neither averaging with an unverified client estimate nor automatically adding a method guarantees credibility.
Why This Is the Correct Answer
Option A is correct because credible results require support by relevant evidence and logic to the degree necessary for the intended use. With one indication, reconciliation tests whether the $265,000 sales indication meets that standard. The appraiser also explains why the other approaches were not developed.
Why the Other Options Are Wrong
Option B: Averaging the single indication with the client’s estimate of value
Option B averages the single indication with the client's estimate of value. A client's estimate is not verified market evidence, and blending it in undermines independent analysis.
Option C: Developing the other two approaches anyway so that there is something to reconcile
Option C develops the other two approaches anyway so there is something to reconcile. Approaches developed without adequate data are not credible and add no reliable support.
Option D: Nothing, because reconciliation requires at least two indications
Option D says reconciliation involves nothing because it requires at least two indications. Reconciliation also involves judging the credibility of the evidence, which still applies with one indication.
One indication, still tested
A lone indication must still prove it is credible for the intended use.
How to use: Use this when only one approach could be developed.
Exam Tip
Reject options saying reconciliation disappears or that extra approaches must be forced; the focus becomes credibility.
Common Mistakes to Avoid
- -Skipping reconciliation when only one approach is used
- -Developing unsupported approaches to have more indications
- -Averaging with a client's estimate
Concept Deep Dive
Analysis
This question tests reconciliation when only one approach can be credibly developed. With a single $265,000 sales indication, the appraiser still must judge whether it is credible for the intended use. Omitted approaches are explained, and no unsupported method is added just to have something to weigh.
Background Knowledge
The scope of work determines which approaches are necessary for credible results. A single approach can be sufficient when appropriate and well supported. Reconciliation then focuses on the quality of that indication and the explanation of excluded approaches.
Real-World Application
An appraiser values a vacant residential lot where only sales comparison applies, indicating $265,000. The appraiser checks the comparables' similarity, verification and dates to confirm credibility. The report explains why the cost and income approaches were not developed.
More Reconciliation Questions
In a cost approach for an improved property, an appraiser estimates site value by sales comparison, allocation and extraction, then settles on one site-value figure before final reconciliation. How is this step best described?
An extraordinary assumption was reasonably supported, properly used and disclosed in an appraisal report. Later, the assumed information is found to be false. Which conclusion is best supported?
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?
Why must a report identify any real property interest that is being excluded from the value opinion?
Which review best helps explain divergent cost, sales-comparison and income indications?
Two value indications are $340,000 and $392,000. What is the difference as a percentage of the lower indication, rounded to one decimal place?
An unauthorized third party requests a lender-client’s report. No due-process or other permitted disclosure exception applies. How should the appraiser respond?
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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