Six land sales produce indications from $88,000 to $96,000. How should the appraiser conclude?
Correct Answer
A) Select a figure supported by the strongest sales
Why this is correct: Even with a narrow range, the appraiser must exercise judgment to select a point estimate supported by the sales most comparable to the subject in key attributes like location, size, zoning, and transaction terms. Why the other choices are wrong: 'Take the arithmetic mean of all six indications' is mechanistic and may give equal weight to less comparable sales. 'Adopt the lowest figure to remain conservative' violates the requirement for impartiality; appraisers must not be arbitrarily conservative or optimistic. 'Report the full range without any conclusion' may be insufficient if the assignment requires a defined value opinion. Exam tip: A narrow range doesn't eliminate the need for judgment. Support your selected figure with the best comparables.
Why This Is the Correct Answer
Why this is correct: Even with a narrow range, the appraiser must exercise judgment to select a point estimate supported by the sales most comparable to the subject in key attributes like location, size, zoning, and transaction terms. Why the other choices are wrong: 'Take the arithmetic mean of all six indications' is mechanistic and may give equal weight to less comparable sales. 'Adopt the lowest figure to remain conservative' violates the requirement for impartiality; appraisers must not be arbitrarily conservative or optimistic. 'Report the full range without any conclusion' may be insufficient if the assignment requires a defined value opinion. Exam tip: A narrow range doesn't eliminate the need for judgment. Support your selected figure with the best comparables.
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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