The appraiser completed sales comparison ($410,000) and cost approach ($445,000) on a 40-year-old home. The final opinion should:
Correct Answer
C) Weight sales comparison heavily, and probe why cost ran high
Why this is correct: For a 40-year-old home, the sales comparison approach is typically most reliable because it reflects actual market actions of buyers. A significant cost approach figure should be investigated, as it may indicate errors in estimating depreciation or other costs. Why the other choices are wrong: Averaging the two approaches without rationale is not a proper reconciliation method. The cost approach is often less reliable for older properties due to depreciation estimates. Reporting both numbers without a conclusion violates the requirement to develop a single defined value opinion. Exam tip: In reconciliation, the sales comparison approach generally gets the most weight for existing properties, especially older ones.
Why This Is the Correct Answer
Why this is correct: For a 40-year-old home, the sales comparison approach is typically most reliable because it reflects actual market actions of buyers. A significant cost approach figure should be investigated, as it may indicate errors in estimating depreciation or other costs. Why the other choices are wrong: Averaging the two approaches without rationale is not a proper reconciliation method. The cost approach is often less reliable for older properties due to depreciation estimates. Reporting both numbers without a conclusion violates the requirement to develop a single defined value opinion. Exam tip: In reconciliation, the sales comparison approach generally gets the most weight for existing properties, especially older ones.
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