What does it mean that a value opinion must be reasonable rather than merely arithmetically derived?
Correct Answer
D) The result must make sense against market behaviour
Why this is correct: Reconciliation requires the appraiser to ensure the final value conclusion is reasonable and consistent with market evidence and behavior, not just a mathematical output from models. Why the other choices are wrong: "Arithmetic plays no part in reaching a conclusion" is false; calculations are essential but not solely determinative. "The conclusion must match the contract price" contradicts the purpose of an independent appraisal. "Calculations must be checked twice before reporting" is a good practice but doesn't address reasonableness. Exam tip: Always ask: "Would a typical market participant agree with this value?" The answer must be yes.
Why This Is the Correct Answer
Why this is correct: Reconciliation requires the appraiser to ensure the final value conclusion is reasonable and consistent with market evidence and behavior, not just a mathematical output from models. Why the other choices are wrong: "Arithmetic plays no part in reaching a conclusion" is false; calculations are essential but not solely determinative. "The conclusion must match the contract price" contradicts the purpose of an independent appraisal. "Calculations must be checked twice before reporting" is a good practice but doesn't address reasonableness. Exam tip: Always ask: "Would a typical market participant agree with this value?" The answer must be yes.
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 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?
A client sends comments disputing the appraiser's adjustment for condition. What is the appropriate response?
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