The evidence supports a range of value. How should the final opinion be reported?
Correct Answer
C) A supported point or range, as permitted by the assignment, with explained reasoning
Choose a supported form of value conclusion that the assignment permits and explain its reasoning and uncertainty. An observed spread does not by itself require a range or justify an unsupported point. Assignment-specific reporting requirements may constrain the permitted form.
Why This Is the Correct Answer
Option C is correct because USPAP recognizes that an appraisal may be expressed as a specific amount, a range of numbers, or a relationship to a benchmark. The appraiser selects a supported form permitted by the assignment and explains the reasoning and uncertainty. Client or assignment requirements may limit which form is allowed.
Why the Other Options Are Wrong
Option A: The midpoint of the range, since it balances the evidence
Option A, reporting the midpoint because it balances the evidence, is wrong because the midpoint is not automatically the best-supported conclusion. Reconciliation weighs the quality of the evidence rather than defaulting to the middle.
Option B: The highest indication, to satisfy the client
Option B, reporting the highest indication to satisfy the client, is wrong because it lets client preference drive the result. A value opinion must reflect the supported evidence.
Option D: An unsupported point value, because a range is inconvenient for the client and the lender
Option D, reporting an unsupported point value because a range is inconvenient, is wrong because convenience does not justify an unsupported conclusion. Any point value must be supported by the analysis.
Point, range, or relationship
USPAP allows three numeric forms: a point, a range, or a relationship to a benchmark. The assignment and the evidence decide which one.
How to use: Use this when asked how a value conclusion may be reported.
Exam Tip
Eliminate options driven by client preference or convenience, and prefer the answer that requires support and explanation.
Common Mistakes to Avoid
- -Defaulting to the midpoint without weighing the evidence
- -Choosing the indication the client prefers
- -Reporting a point value with no explanation of support
Concept Deep Dive
Analysis
This question tests how a value opinion may be expressed. USPAP allows an appraisal to be expressed as a specific amount, a range, or a relationship to a benchmark. The appraiser chooses a supported form that the assignment permits and explains the reasoning.
Background Knowledge
USPAP defines an appraisal as an opinion of value that may be numerically expressed as a specific amount, a range, or a relationship to a previous value or benchmark. Many lending assignments require a point value, which must still be supported. The appraiser explains how the evidence leads to the conclusion.
Real-World Application
A lender assignment requires a single point value, and the adjusted comparables span a modest range. The appraiser reconciles the evidence, selects a supported point value and explains why certain comparables received the most weight.
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?
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