Two appraisers reach different value opinions on the same property with the same effective date. What does this show?
Correct Answer
B) Supported judgments can reasonably differ
An appraisal is an opinion. Two appraisers can reach different, credible conclusions through differences in data selection, adjustments and judgment. A difference alone does not prove either appraiser erred, and a property does not have two market values as of one date. A later opinion does not automatically replace an earlier one; a review of each report's support is needed to judge credibility.
Why This Is the Correct Answer
Option B is correct because an appraisal is an opinion, and supported professional judgments can reasonably differ. Differences in data selection, adjustments and weighting can lead two appraisers to different credible conclusions for the same date. Judging which is better supported requires review of each report's support.
Why the Other Options Are Wrong
Option A: One of the two appraisers must have erred
Option A says one of the appraisers must have erred, but a difference in opinion alone does not prove error. Both conclusions can be credible if each is adequately supported.
Option C: The property has two simultaneous market values
Option C says the property has two simultaneous market values, but market value is defined as a single value as of one date. The two figures are two opinions of that one value.
Option D: The later opinion supersedes the earlier one
Option D says the later opinion supersedes the earlier one, but timing does not decide credibility. A later report does not automatically replace an earlier one; each must be judged on its support.
One value, many opinions
A property has one market value as of a date, but appraisers can hold different supported opinions of it.
How to use: Use this when a question asks what differing appraisals of the same property mean.
Exam Tip
Be wary of answers claiming a difference proves error or creates two values; look for the choice about reasonable differences in supported judgment.
Common Mistakes to Avoid
- -Assuming the lower appraisal must be wrong
- -Treating the more recent report as automatically controlling
- -Thinking two opinions mean the property has two market values
Concept Deep Dive
Analysis
This question tests the nature of an appraisal as an opinion. Two competent appraisers can choose different data, make different adjustments and apply different judgment, and both results can be credible. A difference in conclusions does not by itself show error or create two market values.
Background Knowledge
An appraisal is an opinion of value developed from data, methods and judgment. Because judgment is involved, reasonable professionals can reach different conclusions. Credibility depends on whether each conclusion is supported by relevant evidence and logic, which is what an appraisal review examines.
Real-World Application
A lender orders a second appraisal and receives $540,000, compared with $555,000 in the first. The review appraiser finds that each used different but reasonable comparables and well-supported adjustments. She concludes both are credible and notes the reasons for the difference.
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?
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