Two developed approaches produce different indications, and one relies on stronger, more relevant data. What does SR 1-6 require in reconciliation?
Correct Answer
A) Evaluate data quality and quantity and the applicability and relevance of the approaches used
Reconcile the quality and quantity of data available and analyzed within the approaches and the applicability and relevance of the approaches, methods, and techniques used to reach the conclusion. Relative support can justify different weights. Neither mandatory equal averaging nor automatic selection of the highest indication satisfies this analysis. A report summary does not replace development.
Why This Is the Correct Answer
Option A is correct because SR 1-6 requires the appraiser to reconcile the quality and quantity of data available and analyzed within the approaches used and the applicability and relevance of the approaches, methods, and techniques used. Where one approach rests on stronger, more relevant data, that analysis can justify giving it more weight.
Why the Other Options Are Wrong
Option B: Give both indications equal weight in the final value because both approaches were developed
Option B, giving both indications equal weight because both approaches were developed, is wrong because reconciliation weighs data quality and relevance rather than averaging by default.
Option C: Select whichever indication is the highest of the two approaches
Option C, selecting whichever indication is the highest, is wrong because choosing a figure by its size ignores data quality and relevance and suggests bias toward a higher value.
Option D: Skip reconciliation if the report will summarize the conclusion
Option D, skipping reconciliation if the report will summarize the conclusion, is wrong because reconciliation is a development requirement; the reporting level does not remove it.
Weigh, don't average
Reconciliation weighs each approach by its data quality, quantity, and relevance, like a judge weighing evidence rather than splitting the difference.
How to use: Use this when a choice proposes equal weighting or picking the highest or lowest indication.
Exam Tip
SR 1-6 answers mention quality and quantity of data and applicability and relevance of approaches.
Common Mistakes to Avoid
- -Averaging approach indications without analysis
- -Choosing the highest indication to satisfy a client
- -Thinking a summarized report allows skipping reconciliation
Concept Deep Dive
Analysis
This question tests the SR 1-6 reconciliation requirement. When approaches give different indications, the appraiser reconciles the quality and quantity of data and the applicability and relevance of the approaches, methods, and techniques. The better-supported approach can receive more weight; mechanical averaging or picking the highest figure does not meet the standard.
Background Knowledge
Reconciliation is the final development step, where the appraiser evaluates the reliability and relevance of each indication. Factors include how much and how good the data are and how well each approach fits the property type and market. The result is a supported final opinion of value.
Real-World Application
For an older single-family home, the sales comparison approach uses five recent, nearby sales, while the cost approach relies on uncertain depreciation estimates. The appraiser gives the sales comparison approach primary weight and explains why in the reconciliation.
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