Three approaches indicate $492,000 (sales comparison), $538,000 (cost) and $455,000 (income) for an owner-occupied suburban home. Reconciliation should:
Correct Answer
C) Weight sales comparison most heavily for this property type
Why this is correct: Weight sales comparison most heavily for this property type. For a typical owner-occupied suburban home, the market primarily relies on comparable sales. The sales comparison approach best reflects buyer behavior, so it receives the most weight in reconciliation. Why the other choices are wrong: Averaging the three indications substitutes arithmetic for professional judgment about reliability. Adopting the cost approach figure is not typical for this property type; cost is less relevant for existing homes. Report the range and decline to conclude a value is not reconciliation; the appraiser must reconcile to a single point estimate. Exam tip: Give the most weight to the approach that best mirrors the market's decision-making for that property type.
Why This Is the Correct Answer
Why this is correct: Weight sales comparison most heavily for this property type. For a typical owner-occupied suburban home, the market primarily relies on comparable sales. The sales comparison approach best reflects buyer behavior, so it receives the most weight in reconciliation. Why the other choices are wrong: Averaging the three indications substitutes arithmetic for professional judgment about reliability. Adopting the cost approach figure is not typical for this property type; cost is less relevant for existing homes. Report the range and decline to conclude a value is not reconciliation; the appraiser must reconcile to a single point estimate. Exam tip: Give the most weight to the approach that best mirrors the market's decision-making for that property type.
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Reconciliation of the approaches to value is best described as which activity?
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Which of the following is a written report option named in the current edition of USPAP?
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Why should the reconciliation address the quantity of evidence as well as its quality?
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