Property Valuation
In an appraisal, 'reconciliation' (final value estimate) requires the appraiser to:
AA. Average all three approach values
BB. Weigh the reliability of each approach given the type of property, available data, and purpose of the appraisal, and conclude a final value✓ Correct
CC. Always use the highest value indicated
DD. Always use the cost approach value
Explanation
Reconciliation is the final step in the appraisal process. The appraiser does NOT simply average the three approaches.
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Key Terms to Know
Appraisal
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
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