While reviewing a sales grid before reconciliation, an appraiser sees that a comparable built 15 years before the subject received an age adjustment and also a condition adjustment for the same worn finishes and dated systems that account for the age gap. What problem does this review reveal?
Correct Answer
D) A possible duplicate adjustment, since condition may repeat the age adjustment.
The review before reconciliation checks calculations in a logical framework to prevent duplicate adjustments. When the condition adjustment covers the same wear that the age adjustment already reflects, the comparable is adjusted twice for one difference. Reducing the sale's weight does not fix the double count, and the problem is neither an omitted adjustment nor a market conditions issue.
Why This Is the Correct Answer
Option D is correct because the condition adjustment is for the very wear that explains the age gap, so it may repeat the age adjustment. Checking the grid in a logical framework is meant to catch this kind of duplication before the adjusted prices are reconciled.
Why the Other Options Are Wrong
Option A: An omitted adjustment, because the comparable's effective age has not been considered.
Option A calls this an omitted adjustment for effective age, but nothing has been left out; the comparable was adjusted for age and again for condition. The problem is too much adjustment, not too little.
Option B: A market conditions error, because the sale date was not adjusted for the age gap.
Option B calls it a market conditions error tied to the sale date, but market conditions adjustments address changes in the market over time, not the physical age of the building. The facts describe two physical adjustments for one difference.
Option C: An excessive gross adjustment, which is cured by giving the sale less weight.
Option C treats the issue as an excessive gross adjustment cured by giving the sale less weight. The adjusted price is wrong because of the double count, and lowering its weight leaves the error in the analysis instead of correcting the adjustment.
One difference, one adjustment
Ask what each adjustment is paying for. If two rows are paying for the same worn finishes, one of them should come out.
How to use: Use this when a grid adjusts for both age and condition, or for any two elements that may measure the same feature.
Exam Tip
If two adjustments in a scenario describe the same underlying cause, the issue being tested is likely duplication.
Common Mistakes to Avoid
- -Adjusting separately for age and condition when both reflect the same wear
- -Reducing a sale's weight instead of correcting an adjustment error
- -Skipping the logical review of the grid before reconciliation
Concept Deep Dive
Analysis
The question asks the candidate to spot a double count during the review that precedes reconciliation. Age and condition are separate rows in a sales grid, but in this case both rows measure the same worn finishes and dated systems. Adjusting for both counts one difference twice and distorts the adjusted price.
Background Knowledge
Reviewing the appraisal before reconciliation includes checking arithmetic and checking that adjustments make logical sense together. Age and condition adjustments often overlap because much of a building's wear comes with age. Each difference between subject and comparable should be adjusted once.
Real-World Application
An appraiser adjusts an older comparable for age and then for condition, citing the original kitchen and roof both times. On review, the appraiser recognizes the age adjustment already reflects those items and removes the overlap before reconciling the sales.
More Reconciliation Questions
In a cost approach for an improved property, an appraiser estimates site value by sales comparison, allocation and extraction, then settles on one site-value figure before final reconciliation. How is this step best described?
An extraordinary assumption was reasonably supported, properly used and disclosed in an appraisal report. Later, the assumed information is found to be false. Which conclusion is best supported?
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?
An appraisal has a current effective date and permits an extraordinary assumption if its requirements are met. Which situation involves uncertain information rather than a fact known to be contrary to reality on that date?
Why must a report identify any real property interest that is being excluded from the value opinion?
Which review best helps explain divergent cost, sales-comparison and income indications?
Two value indications are $340,000 and $392,000. What is the difference as a percentage of the lower indication, rounded to one decimal place?
An unauthorized third party requests a lender-client’s report. No due-process or other permitted disclosure exception applies. How should the appraiser respond?
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?
People Also Study
Real Estate Market
13.6% of exam
Property Description
11.8% of exam
Land or Site Valuation
4.5% of exam
Sales Comparison Approach
16.4% of exam
Cost Approach
13.6% of exam
Previous Question
An appraiser reconciles to a value at the top of the indicated range because the client needs that figure. What has occurred?
Next Question
An appraiser has finished all three approaches and now rechecks the calculations, data and premises of each one before weighing the indications. How does this review step relate to reconciliation?