Owner-occupants in the subject’s market compare purchase prices, and ample verified competitive sales provide strong evidence. Which reconciliation is best supported?
Correct Answer
A) Give sales comparison primary weight based on that evidence and market behavior.
The stated buyer behavior and strong sales evidence support primary reliance on sales comparison. The conclusion is conditional on those facts, rather than an automatic rule for all residential property. Explain why other approaches are less persuasive in this assignment.
Why This Is the Correct Answer
Option A is correct because the stated buyers compare prices of competing homes and the verified sales provide strong evidence. A sales comparison indication is direct evidence of the market's opinion of value, and comparable sales are usually a more accurate index of market value than other evidence. Primary weight on sales comparison matches both the market behavior and the data.
Why the Other Options Are Wrong
Option B: Give cost all weight, since it involves more calculations than the other approaches.
Option B gives cost all weight because it involves more calculations. The number of calculations does not make an approach reliable or relevant to how these buyers make decisions.
Option C: Give income all weight, since a rent multiplier can be computed for the house.
Option C gives income all weight because a rent multiplier can be computed for the house. Being able to compute a figure does not make it the best measure when owner-occupants buy based on purchase prices of competing homes.
Option D: Give each approach equal weight without comparing its support.
Option D gives each approach equal weight without comparing their support. Reconciliation requires evaluating the reliability of each approach, and equal weighting here would ignore the stronger sales evidence.
Think like the buyer
If buyers shop by comparing prices, the approach that compares prices should lead.
How to use: Use this when a stem describes how buyers in the market make decisions.
Exam Tip
Match the approach to the stated buyer motivation and data quality; reasons like 'more calculations' or 'can be computed' are distractors.
Common Mistakes to Avoid
- -Weighting an approach because it is more complex
- -Giving weight to an approach simply because it can be computed
- -Weighting equally without comparing support
Concept Deep Dive
Analysis
This question tests tying weighting to buyer behavior and evidence strength. Owner-occupants compare purchase prices, and ample verified competitive sales exist. Under those facts, sales comparison deserves primary weight, with the other approaches explained as less persuasive in this assignment.
Background Knowledge
Approach weighting should reflect how typical buyers in the subject's market decide what to pay. Owner-occupants generally compare competing homes, which sales comparison measures directly. The conclusion depends on the facts and is not an automatic rule for all residential property.
Real-World Application
In a suburban neighborhood of owner-occupied homes, an appraiser finds many recent verified sales. A rent multiplier could be computed, but few homes are rented. The appraiser gives sales comparison primary weight and explains why the income indication is less persuasive.
More Reconciliation Questions
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Indications are $410,000 (sales comparison), $432,000 (cost) and $395,000 (income). The appraiser assigns weights of 50%, 30% and 20%. What is the weighted indication?