Reconciliation of the sales comparison approach differs from final reconciliation in that the former:
Correct Answer
D) Reconciles the individual comparable indications within that approach
Within sales comparison, reconcile the reliability and relevance of individual comparable indications. Final reconciliation considers the applicability and evidence of the developed approaches. Neither step universally requires numerical weights, exactly three approaches or one particular report format.
Why This Is the Correct Answer
Option D is correct because reconciliation within the sales comparison approach weighs the individual comparable indications, giving the most weight to the sales closest in comparability to the subject. Final reconciliation, by contrast, considers the applicability and support of the approaches that were developed.
Why the Other Options Are Wrong
Option A: It sets the length of the final appraisal report and its exhibits
Option A is wrong because it says this reconciliation sets the length of the final report and its exhibits. Report length and exhibits follow the assignment and reporting requirements, not the weighing of comparable indications.
Option B: Assigns equal weights to the three approaches to value
Option B is wrong because it says the step assigns equal weights to the three approaches to value. Weighing approaches belongs to final reconciliation, and even there equal weights are not required; reliance follows the applicability and evidence of each approach.
Option C: It establishes the effective date after the valuation is complete
Option C is wrong because it says this reconciliation establishes the effective date after the valuation is complete. The effective date is part of the assignment's definition at the start, not an outcome of reconciling comparables.
Inside comps, then across approaches
Sales comparison reconciliation looks inside one approach at its comparables. Final reconciliation looks across the approaches.
How to use: Use this to tell which level of reconciliation a question is describing.
Exam Tip
If an answer talks about weighing approaches, it describes final reconciliation, not reconciliation within the sales comparison approach.
Common Mistakes to Avoid
- -Confusing reconciliation of comparables with final reconciliation of approaches
- -Assuming the approaches must receive equal weights
- -Treating the effective date as something set during reconciliation
Concept Deep Dive
Analysis
This question tests the difference between reconciling within the sales comparison approach and final reconciliation. Within the approach, the appraiser weighs the individual comparable indications; in final reconciliation, the appraiser weighs the different approaches that were developed. The answer describes the first, narrower step.
Background Knowledge
Reconciliation happens at two levels. Within an approach, the appraiser compares the reliability and relevance of each indication, such as each adjusted comparable; in final reconciliation, the appraiser weighs the approaches developed and explains the final opinion of value.
Real-World Application
An appraiser's grid shows five adjusted comparables ranging over a few thousand dollars. She places the most weight on the two sales needing the fewest and smallest adjustments, then later, in final reconciliation, compares that result with her cost approach.
More Sales Comparison Questions
Supported adjustments are: non-market financing $10,000, GLA $36/sf, garage $3,500 per car, pool/spa $12,500. A comparable identical to the 2,800 sf subject sold for $267,000 with non-market financing. What is its adjusted price?
Using GLA $36/sf and non-market financing $10,000: a 3,100 sf comparable sold for $277,000 with non-market financing; the subject has 2,800 sf. Bath count differences are not adjusted. What is the adjusted price?
Using garage $3,500 per car and pool/spa $12,500: a comparable with a 2-car garage and a pool/spa sold for $268,000. The subject has a 3-car garage and no pool. What is the adjusted price?
Using GLA $36/sf, garage $3,500 per car and pool/spa $12,500: a 2,600 sf comparable with a 2-car garage and a pool/spa sold for $264,000. The subject is 2,800 sf with a 3-car garage and no pool. What is the adjusted price?
In a neighborhood with declining values and marketing times over six months, what must Fannie Mae lenders confirm about the sales comparison analysis?
A house is a 4,000 square foot home in an area of 2,000 square foot homes. How must the appraiser treat this over-improvement in the sales comparison grid?
According to the Interagency Appraisal and Evaluation Guidelines, which items should an appraisal’s market conditions discussion include?
A comparable listed at $420,000 and sold for $399,000. What sale-to-list price ratio (sale price ÷ list price) does this indicate?
An appraiser wants to describe the neighborhood boundaries in a Fannie Mae report. Which approach is acceptable?
Which of these is listed by Fannie Mae as a sales or financing concession?
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Previous Question
Three comparables, adjusted for all elements except size, indicate $152, $148 and $150 per square foot. The subject has 2,000 square feet and the appraiser gives equal weight. What value does the unit-price analysis indicate?
Next Question
A comparable's cash-equivalent price is $400,000. Market evidence supports an upward market-conditions adjustment equal to 5% of that price. What is the adjusted price?