Three comparables adjust to $412,000 (gross adj. 5%), $405,000 (gross adj. 22%), and $410,000 (gross adj. 8%). What is the best-supported value conclusion?
Correct Answer
D) About $411,000, weighting the two least-adjusted sales
Why this is correct: The governing concept in reconciliation is to weight comparables based on reliability, typically indicated by the magnitude of adjustments. Smaller gross adjustments suggest better similarity and more reliable indications. Here, the comparables with 5% and 8% adjustments cluster around $410,000–$412,000 and are more reliable, leading to a reconciled value near $411,000. The sale with a 22% adjustment is less reliable and should be given less weight. Why the other choices are wrong: "$409,000, taking the straight average of the three sales" is incorrect because averaging treats all sales equally regardless of reliability. "$405,000, favoring the middle indication" is incorrect because the middle sale has the largest adjustments, making it the least reliable. "$412,000, the highest and most recent sale" is incorrect because recency alone doesn't outweigh adjustment magnitude; the highest sale may still require significant adjustments. Exam tip: In reconciliation, prioritize comparables with the smallest adjustments as they are most similar to the subject.
Why This Is the Correct Answer
Why this is correct: The governing concept in reconciliation is to weight comparables based on reliability, typically indicated by the magnitude of adjustments. Smaller gross adjustments suggest better similarity and more reliable indications. Here, the comparables with 5% and 8% adjustments cluster around $410,000–$412,000 and are more reliable, leading to a reconciled value near $411,000. The sale with a 22% adjustment is less reliable and should be given less weight. Why the other choices are wrong: "$409,000, taking the straight average of the three sales" is incorrect because averaging treats all sales equally regardless of reliability. "$405,000, favoring the middle indication" is incorrect because the middle sale has the largest adjustments, making it the least reliable. "$412,000, the highest and most recent sale" is incorrect because recency alone doesn't outweigh adjustment magnitude; the highest sale may still require significant adjustments. Exam tip: In reconciliation, prioritize comparables with the smallest adjustments as they are most similar to the subject.
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