Chapter 5: Reconciliation, Value Conclusions, and Appraisal Reports
Used throughout the appraisal process anytime the appraiser must reduce multiple indications into a single estimate.
Final reconciliation involves reconciling the difference among the specific valuation techniques that were chosen for the appraisal.
Determination of the weights
Bayesian (educated guessing)
Market driven based upon the percentage of newly constructed properties and the percentage of rentals.
Income Approach Value=$105,000
20% New, 50% Rentals, 30% Resales
.2×$120,000+.5×$105,000+.3×98,000 = $105,900
Beware of Significant figures problem
$34.35/sq.ft. * 988,363 sq.ft =$33,950,269.05
However, this must be rounded to $33,950,000 because the maximum number of significant figures is four.
Round to market expected numbers.
Range of Value and Probability Distributions
Range may be more useful to client than a point estimate especially when appraising for a seller who wants to know what price the property should sell.
Distribution is helpful when sufficient data is available. Especially useful when multi-modal distributions are present.