Reconciliation of the approaches to value is best described as which activity?
Correct Answer
A) Weighing each indication for reliability and relevance
Why this is correct: Reconciliation is the process of weighing each value indication from the three approaches for its reliability (based on data quality) and relevance (based on how typical buyers for that property type make decisions). It is a professional judgment, not a mechanical computation. Why the other choices are wrong: Averaging the indications the approaches produced is an arithmetic shortcut that ignores the differing strengths of each approach. Selecting whichever indication falls in the middle similarly avoids judgment. Adopting the indication that suits the client's need violates impartiality and USPAS. Exam tip: Reconciliation is about judgment and support, not averaging.
Why This Is the Correct Answer
Why this is correct: Reconciliation is the process of weighing each value indication from the three approaches for its reliability (based on data quality) and relevance (based on how typical buyers for that property type make decisions). It is a professional judgment, not a mechanical computation. Why the other choices are wrong: Averaging the indications the approaches produced is an arithmetic shortcut that ignores the differing strengths of each approach. Selecting whichever indication falls in the middle similarly avoids judgment. Adopting the indication that suits the client's need violates impartiality and USPAS. Exam tip: Reconciliation is about judgment and support, not averaging.
More Reconciliation Questions
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?
A client sends comments disputing the appraiser's adjustment for condition. What is the appropriate response?
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