An appraiser reconciling three approaches has value indications of $355,000, $362,000 and $358,000, with assigned weights of 50%, 20% and 30%, respectively. What is the weighted indication, rounded to the nearest dollar?
Correct Answer
D) $357,300
Use the specified matching order: $355,000 × 0.5 + $362,000 × 0.2 + $358,000 × 0.3 = $357,300.00. Rounded to the nearest dollar, this is $357,300. These are assigned arithmetic weights. Actual reconciliation requires a reasoned analysis of applicability and data reliability; property type alone does not prescribe this numerical weighting.
Why This Is the Correct Answer
Option D is correct because $355,000 × 0.5 = $177,500, $362,000 × 0.2 = $72,400 and $358,000 × 0.3 = $107,400. Adding them gives $177,500 + $72,400 + $107,400 = $357,300. These weights are stated in the facts; in practice, weights must come from a reasoned analysis of applicability and data reliability.
Why the Other Options Are Wrong
Option A: $358,333
Option A, $358,333, is the simple unweighted average: ($355,000 + $362,000 + $358,000) / 3 = $358,333. The weights of 50%, 20% and 30% give $357,300.
Option B: $355,000
Option B, $355,000, is just the indication carrying the 50% weight, ignoring the other two. Applying all three weights gives $177,500 + $72,400 + $107,400 = $357,300.
Option C: $249,900
Option C, $249,900, adds only the first two products ($177,500 + $72,400) and omits $358,000 × 0.3 = $107,400. Including all three products gives $357,300.
Multiply each, then add all
For a weighted average, multiply each indication by its own weight, then add all the products.
How to use: Use this on any weighted reconciliation arithmetic question.
Exam Tip
Check that your weights add to 100% and that you included all products; a total far below the indications means a term was dropped.
Common Mistakes to Avoid
- -Using a simple average instead of the weights
- -Leaving out one of the weighted products
- -Matching weights to the wrong indications
Concept Deep Dive
Analysis
This calculation tests a weighted average with weights given in a matching order. Multiply each indication by its weight and add all three products. Common errors are using a simple average, using only the heaviest-weighted indication or dropping one of the products.
Background Knowledge
A weighted average multiplies each value by its weight and sums the results, with the weights adding to 100%. In appraisal, a weighted average is acceptable only when the appraiser explains why the weights fit the evidence. The final opinion should not come from a formula applied without that analysis.
Real-World Application
An appraiser uses a weighted summary to show how her judgment translates into numbers. She explains that the sales approach gets half the weight because of strong recent data, the income approach 30% and the cost approach 20%. The narrative, not the formula alone, supports the result.
More Reconciliation Questions
In a cost approach for an improved property, an appraiser estimates site value by sales comparison, allocation and extraction, then settles on one site-value figure before final reconciliation. How is this step best described?
An extraordinary assumption was reasonably supported, properly used and disclosed in an appraisal report. Later, the assumed information is found to be false. Which conclusion is best supported?
An otherwise applicable valuation approach cannot be developed reliably from the available data. The remaining scope can produce credible assignment results. What should the appraiser do?
May an appraiser use a hypothetical condition in any assignment?
An appraisal has a current effective date and permits an extraordinary assumption if its requirements are met. Which situation involves uncertain information rather than a fact known to be contrary to reality on that date?
Why must a report identify any real property interest that is being excluded from the value opinion?
Which review best helps explain divergent cost, sales-comparison and income indications?
Two value indications are $340,000 and $392,000. What is the difference as a percentage of the lower indication, rounded to one decimal place?
An unauthorized third party requests a lender-client’s report. No due-process or other permitted disclosure exception applies. How should the appraiser respond?
An appraiser proposes to assume there are no hidden defects. Which fact would characterize that assumption as extraordinary under the USPAP 2024 definition, rather than justify dismissing it as routine boilerplate?
People Also Study
Real Estate Market
13.6% of exam
Property Description
11.8% of exam
Land or Site Valuation
4.5% of exam
Sales Comparison Approach
16.4% of exam
Cost Approach
13.6% of exam
Previous Question
Under USPAP, how may an appraiser authorize another person to affix the appraiser’s electronic signature?
Next Question
A comparable sold for $400,000. The appraiser's market-supported adjustments are +$30,000 for GLA, -$8,000 for location, +$12,000 for condition and +$6,000 for a garage. What is the gross adjustment percentage, measured against the comparable's sale price?