Two approaches diverge widely and the appraiser cannot determine why. What is the appropriate course?
Correct Answer
C) Expand the research until the cause is found
Why this is correct: A significant, unexplained divergence between approaches indicates a potential flaw in data, assumptions, or analysis within one or both approaches. The appraiser's obligation is to produce a credible result, which requires resolving the conflict through additional research and verification. Why the other choices are wrong: 'Report the more familiar of the two indications' is arbitrary and unsupported. 'Average them, since neither can be preferred' is a mechanical solution that ignores the underlying problem. 'Omit both approaches from the final report' is not justified if they are applicable; the problem must be investigated. Exam tip: An unresolved major divergence means your work is not complete. Keep digging until you find the cause.
Why This Is the Correct Answer
Why this is correct: A significant, unexplained divergence between approaches indicates a potential flaw in data, assumptions, or analysis within one or both approaches. The appraiser's obligation is to produce a credible result, which requires resolving the conflict through additional research and verification. Why the other choices are wrong: 'Report the more familiar of the two indications' is arbitrary and unsupported. 'Average them, since neither can be preferred' is a mechanical solution that ignores the underlying problem. 'Omit both approaches from the final report' is not justified if they are applicable; the problem must be investigated. Exam tip: An unresolved major divergence means your work is not complete. Keep digging until you find the cause.
More Reconciliation Questions
Reconciliation of the approaches to value is best described as which activity?
Why should the reconciliation address the quantity of evidence as well as its quality?
How long must a report be retained compared with the workfile?
What distinguishes an appraisal review from an appraisal?
An appraiser reconciles to a value at the top of the indicated range because the client needs that figure. What has occurred?
What does it mean that a value opinion must be reasonable rather than merely arithmetically derived?
What should the reconciliation section explain to the reader?
How do the content obligations of the two report options differ with respect to the information analyzed?
The three approaches indicate $480,000, $495,000 and $610,000. What should the appraiser do first?
Three approaches indicate $1.02 million, $1.05 million and $1.04 million. How should this be reported?
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