Site value is indicated at $118,000 by sales comparison drawn from six sales, $109,000 by extraction from two sales, and $124,000 by allocation using a market ratio. Which indication deserves the most weight?
Correct Answer
A) $118,000, from sales comparison with six sales behind it
Why this is correct: sales comparison rests on the most direct evidence and the largest sample, and where vacant sales exist it is the primary method for site value. Why the other choices are wrong: extraction depends on a cost estimate and a depreciation estimate on top of only two sales; allocation applies a ratio rather than measuring this site; and the mean of $117,000 gives the weakest two methods two-thirds of the say.
Why This Is the Correct Answer
Why this is correct: sales comparison rests on the most direct evidence and the largest sample, and where vacant sales exist it is the primary method for site value. Why the other choices are wrong: extraction depends on a cost estimate and a depreciation estimate on top of only two sales; allocation applies a ratio rather than measuring this site; and the mean of $117,000 gives the weakest two methods two-thirds of the say.
More Reconciliation Questions
Reconciliation of the approaches to value is best described as which activity?
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?
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