Property Valuation
An appraiser's 'reconciliation' in the appraisal report involves:
AAveraging the values produced by each appraisal approach
BWeighing the results of the approaches used and forming a final value conclusion✓ Correct
CAdjusting the value downward for any defects found
DConfirming the value with the lender
Explanation
Reconciliation is the appraiser's analytical process of weighing the results from each approach used (cost, income, sales comparison) and forming a final, supported value conclusion — not simply averaging.
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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.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
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