Two otherwise applicable approaches diverge materially for an unexplained reason. What is the appropriate next step?
Correct Answer
C) Verify and analyze the inputs, assumptions and methods further.
Investigate the cause and significance of the divergence before choosing weights. Additional work may identify an error or an unreliable method. If necessary support remains unavailable, reassess whether credible results can be produced; no rule guarantees that further research will always discover a single cause.
Why This Is the Correct Answer
Option C is correct because the appraiser should investigate the cause and significance of the divergence before choosing weights. Additional verification may reveal an error or an unreliable method. The appraiser may expand the scope of work to include any additional research or analysis needed for a complex assignment.
Why the Other Options Are Wrong
Option A: Select the more familiar figure without further review.
Option A, selecting the more familiar figure without further review, substitutes comfort for analysis. Familiarity is not evidence of reliability.
Option B: Average the figures because the reason for divergence is unknown.
Option B, averaging the figures because the reason for divergence is unknown, hides the problem. An unexplained gap may mean one indication is wrong, and averaging would carry the error into the conclusion.
Option D: Omit both from the report without investigating their relevance.
Option D, omitting both from the report without investigating their relevance, discards applicable evidence. The divergence should be investigated, not hidden.
Gap means dig
When two approaches disagree and you don't know why, dig into the inputs before you weigh anything.
How to use: Use this whenever a question describes an unexplained difference between indications.
Exam Tip
Investigation is usually the best answer when divergence is unexplained. Averaging, picking a favorite or omitting are shortcuts.
Common Mistakes to Avoid
- -Averaging divergent indications without investigation
- -Choosing the familiar figure by habit
- -Removing conflicting approaches from the report
Concept Deep Dive
Analysis
This question tests what to do when two applicable approaches diverge materially for an unknown reason. Unexplained divergence is a signal to investigate, not to average or pick a favorite. The appraiser should verify inputs, assumptions and methods.
Background Knowledge
Material divergence between approaches often points to an input error, an unsupported assumption or a method that does not fit the property. If support remains unavailable after investigation, the appraiser reassesses whether credible results can be produced.
Real-World Application
An appraiser's cost indication is far above her sales indication for a newer home. On review she finds she used a cost figure for a higher construction quality than the subject has, corrects it and the indications come closer together.
More Reconciliation Questions
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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?
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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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