Why should the reconciliation address the quantity of evidence as well as its quality?
Correct Answer
D) One excellent sale may still be a single observation
Why this is correct: Both the quality (similarity) and quantity (number) of comparable sales are critical in reconciliation. A single, highly similar sale provides strong evidence for a specific transaction price but is a weak indicator of the overall market range or pattern, as it represents just one data point. Why the other choices are wrong: The choice stating USPAP requires a count of data points be reported is incorrect; USPAP requires disclosure of sufficient information but not a specific count. The choice that more data always produces a more accurate result is wrong; many poor-quality comparables can be misleading. The choice that a single verified sale is stronger than several is false; one sale lacks the statistical reliability of a sample. Exam tip: One perfect comparable is great for precision; many rough comparables are better for establishing a market range.
Why This Is the Correct Answer
Why this is correct: Both the quality (similarity) and quantity (number) of comparable sales are critical in reconciliation. A single, highly similar sale provides strong evidence for a specific transaction price but is a weak indicator of the overall market range or pattern, as it represents just one data point. Why the other choices are wrong: The choice stating USPAP requires a count of data points be reported is incorrect; USPAP requires disclosure of sufficient information but not a specific count. The choice that more data always produces a more accurate result is wrong; many poor-quality comparables can be misleading. The choice that a single verified sale is stronger than several is false; one sale lacks the statistical reliability of a sample. Exam tip: One perfect comparable is great for precision; many rough comparables are better for establishing a market range.
More Reconciliation Questions
Reconciliation of the approaches to value is best described as which activity?
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?
A client sends comments disputing the appraiser's adjustment for condition. What is the appropriate response?
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