Three adjusted indications come in at $304,000, $306,000 and $309,000, all with gross adjustments near 8%. What conclusion does this support?
Correct Answer
A) A close cluster that still requires evaluation of comparability and support
Close indications and similar gross percentages alone do not prove equal reliability. Verify competitive similarity and adjustment support before deciding relative reliance and a supported point or range. The center can be reasonable if evidence supports it, but is not compelled by clustering.
Why This Is the Correct Answer
Option A is correct because indications of $304,000, $306,000 and $309,000 with gross adjustments near 8% form a close cluster that suggests consistency. The appraiser still needs to verify competitive similarity and adjustment support before deciding how much reliance each sale deserves.
Why the Other Options Are Wrong
Option B: Automatic proof of equal reliability, so the exact midpoint is the conclusion
Option B treats the cluster as proof of equal reliability and makes the exact midpoint the conclusion. Close indications and similar gross percentages do not establish equal reliability, and a midpoint is reasonable only if the evidence supports it.
Option C: Automatic selection of the highest number in the cluster
Option C picks the highest number in the cluster, $309,000, as a matter of course. Nothing in the data supports favoring the top indication without analysis of each sale's reliability.
Option D: An inability to develop any supported point estimate
Option D says no supported point estimate can be developed. A tight range of well-supported indications is generally favorable evidence and does not prevent a supported conclusion.
Tight range, still check
A tight cluster is a good sign, but each sale still has to earn its weight.
How to use: Use this when a question offers a close cluster of adjusted values.
Exam Tip
Be wary of answers that let the numbers alone decide the conclusion; reconciliation calls for judging the evidence behind them.
Common Mistakes to Avoid
- -Treating a close cluster as proof of equal reliability
- -Picking the highest indication without support
- -Assuming a point estimate cannot be developed
Concept Deep Dive
Analysis
This question tests interpretation of a tight cluster of adjusted indications. A narrow range with similar gross adjustments is encouraging, but it does not by itself prove the comparables are equally reliable, so the appraiser still evaluates comparability and support before concluding.
Background Knowledge
Reconciliation considers the number and size of adjustments, the quality of the data and the comparability of each sale. A narrow range of indications is a positive sign, but appraisers still assess each sale before weighting it. The final opinion may be a point within the range or a range, depending on the assignment.
Real-World Application
An appraiser's three comparables adjust to $304,000, $306,000 and $309,000, each with about 8% gross adjustments. After confirming the sales are competitive and the adjustments supported, the appraiser gives most weight to the most similar sale and concludes at $306,000.
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