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
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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