Florida Real Estate Broker ExaminationValuation and Market AnalysisHard
An appraiser is reconciling the final value estimate for a residential property using the sales comparison approach. Three comparable properties were used: Comp 1 adjusted to $410,000, Comp 2 adjusted to $425,000, and Comp 3 adjusted to $405,000. Comp 2 was considered the most similar to the subject property in terms of location and features, despite being slightly older. What would be the most appropriate final value conclusion for the subject property?
- A$425,000 (weighted heavily towards Comp 2)
- B$420,000 (midpoint of the range)
- C$413,333 (simple average of all comps)
- D$405,000 (lowest adjusted comparable)
Show answer & explanationAnswer & explanation
Correct answer: A. $425,000 (weighted heavily towards Comp 2)
In the reconciliation phase of the sales comparison approach, the appraiser assigns more weight to the comparable properties that are most similar to the subject property. Since Comp 2 was deemed 'most similar' and had the highest reliability, its adjusted value of $425,000 should heavily influence, if not entirely determine, the final value conclusion.
Why the other options are wrong
- B. The midpoint does not account for the superior reliability of a specific comparable.
- C. A simple average is generally not appropriate in reconciliation, as it gives equal weight to all comps regardless of similarity.
- D. The lowest comparable is not necessarily the most accurate if a different comparable is deemed most similar.
Reconciliation (Appraisal)
The final step in the appraisal process where the appraiser weighs the reliability and applicability of the data and approaches used to arrive at a single, final value estimate.
- Not an average of values
- Involves judgment and weighting of approaches/comparables
- Most weight given to most reliable data/approach
Memory trick: Weigh the evidence, choose the best, then state the value with confidence.