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
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?
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?
How long must a report be retained compared with the workfile?
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