Three sales adjust to $300,000, $310,000 and $330,000, with gross adjustments of $85,000, $15,000 and $37,200 respectively. The appraiser assigns 60%, 30% and 10% weight in order of gross adjustment as a share of the adjusted price, smallest first. What is the reconciled indication?
Correct Answer
D) $315,000
Gross adjustment shares are 28.3% ($85,000 ÷ $300,000), 4.8% ($15,000 ÷ $310,000) and 11.3% ($37,200 ÷ $330,000). Smallest first: $310,000 gets 60%, $330,000 gets 30% and $300,000 gets 10%: $186,000 + $99,000 + $30,000 = $315,000. Greatest weight goes to the sales closest in comparability.
Why This Is the Correct Answer
Option D is correct because the gross adjustment shares are 28.3% ($85,000 ÷ $300,000), 4.8% ($15,000 ÷ $310,000) and 11.3% ($37,200 ÷ $330,000). Ranked smallest first, $310,000 gets 60%, $330,000 gets 30% and $300,000 gets 10%. That gives $186,000 + $99,000 + $30,000 = $315,000.
Why the Other Options Are Wrong
Option A: $313,333
Option A, $313,333, is the equal-weight average: ($300,000 + $310,000 + $330,000) ÷ 3. It ignores the stated weights; the correct weighted result is $310,000 × 0.6 + $330,000 × 0.3 + $300,000 × 0.1 = $315,000.
Option B: $321,000
Option B, $321,000, comes from reversing the weights in listed order: $300,000 × 0.1 + $310,000 × 0.3 + $330,000 × 0.6. The weights must follow the gross adjustment ranking, which gives $315,000.
Option C: $306,000
Option C, $306,000, applies the weights in listed order without ranking: $300,000 × 0.6 + $310,000 × 0.3 + $330,000 × 0.1. Ranking by gross adjustment share puts 60% on the $310,000 sale, giving $315,000.
Rank first, then weight
Compute each sale's gross adjustment percentage, list them from smallest to largest, and only then attach the weights.
How to use: Use this sequence in any weighted-reconciliation calculation question.
Exam Tip
Compute the gross adjustment percentage, not the dollar amount, when the question specifies a share of adjusted price. Distractors often come from using the listed order.
Common Mistakes to Avoid
- -Applying weights in the order the sales are listed
- -Ranking by gross adjustment dollars instead of percentage of price
- -Using a simple average when weights are given
Concept Deep Dive
Analysis
This calculation tests whether you can rank comparables by gross adjustment as a percentage of adjusted price and then apply the stated weights. The trap is applying the weights in the listed order instead of the ranked order. Compute each percentage, rank smallest to largest, then multiply and add.
Background Knowledge
Gross adjustment as a percentage of price is one common indicator of comparability: less total adjustment generally means a sale is more similar to the subject. Greatest weight goes to the sales closest in comparability.
Real-World Application
An appraiser has three adjusted sales and weights them by gross adjustment percentage. She finds the second sale needed only about 5% adjustment and gives it the most weight, documenting the ranking in her reconciliation comments.
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