What is appropriate when developing multiple appraisal approaches?
Correct Answer
B) Use supported inputs appropriate to each method without forcing their results to match.
Each approach should be developed on its appropriate evidence rather than manipulated to achieve agreement. Approaches may legitimately share market inputs, so independence does not mean every input must be unrelated. Reconciliation explains differences and relative support instead of forcing equality.
Why This Is the Correct Answer
Option B is correct because each approach should be developed on its appropriate evidence rather than manipulated to achieve agreement. Approaches may legitimately share market inputs, so independence does not mean every input must be unrelated. Reconciliation explains differences and relative support instead of forcing equality.
Why the Other Options Are Wrong
Option A: Change a supported cost estimate so that it equals the sales indication.
Option A changes a supported cost estimate so that it equals the sales indication. That manipulates the result and defeats the purpose of using more than one approach.
Option C: Discard all other approaches simply because one has been calculated.
Option C discards all other approaches simply because one has been calculated. Calculating one approach does not make others inapplicable; each applicable approach is evaluated on its merits.
Option D: Treat an automatic equal average as proof that each method is independently supported.
Option D treats an automatic equal average as proof that each method is independently supported. Averaging proves nothing about support; each method's inputs must be supported on their own.
Let the approaches speak
Each approach gives its own honest answer; reconciliation listens to all of them and explains the differences.
How to use: Use this when an option suggests tweaking one approach to match another.
Exam Tip
Choose the option that keeps each approach based on supported inputs. Options that force agreement or skip approaches are wrong.
Common Mistakes to Avoid
- -Adjusting one approach's inputs to match another approach
- -Treating shared market inputs as improper
- -Using an average as evidence of support
Concept Deep Dive
Analysis
This question tests integrity in developing multiple approaches. Each approach should rest on its own appropriate, supported inputs, and results should not be manipulated to agree. Reconciliation then explains any differences.
Background Knowledge
Using several approaches provides cross-checks on value. That benefit disappears if inputs are adjusted to make results match, so differences are analyzed and explained instead.
Real-World Application
An appraiser's cost indication is $25,000 above her sales indication. Rather than altering depreciation to close the gap, she reviews her inputs, finds them supported and explains in reconciliation why sales comparison is more reliable for this home.
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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Previous Question
Within the sales comparison approach, adjusted sales are $402,000 (gross adjustments 4%), $415,000 (18%) and $398,000 (22%). Which reconciliation best follows accepted guidance?
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An appraiser writes that the approaches were given equal weight because each was fully developed. What is wrong with this reasoning?