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
An appraiser is told the property has no environmental contamination and cannot verify it. How should this be handled?
Reconciliation of the approaches to value is best described as which activity?
Significant appraisal assistance from a person who does not sign the report must be treated how?
In appraising a hotel as a going concern, what must be allocated?
What does it mean to say an approach is not applicable to an assignment?
Which of the following is a written report option named in the current edition of USPAP?
What distinguishes qualitative from quantitative analysis in the sales comparison approach?
Why should the reconciliation address the quantity of evidence as well as its quality?
An appraisal report includes an addendum explaining the adjustment derivation. How does this affect compliance?
An extraordinary assumption proves false after the report is delivered. What follows?
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