Property Valuation
An appraisal must always be reconciled to a final value estimate. Reconciliation means the appraiser:
AAverages the values from all three approaches
BConsiders and weights the results of all approaches used to arrive at a final value conclusion✓ Correct
CSelects the highest value to protect the lender
DReports only one approach and discards the others
Explanation
Reconciliation is the analytical process where the appraiser considers the reliability and applicability of each valuation approach and weights them appropriately to develop a final opinion of value — not a simple average.
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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.
Fiduciary DutyThe highest legal duty an agent owes to a principal — requiring the agent to act in the principal's best interest above all others.
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