**Chapter 5: Reconciliation, Value
Conclusions, and Appraisal Reports**

**Reconciliation**

## u Used
throughout the appraisal process anytime the appraiser must reduce multiple
indications into a single estimate.

## u Final
reconciliation involves reconciling the difference among the specific valuation
techniques that were chosen for the appraisal.

### u Weighted
averages

### u Determination
of the weights

#### u Bayesian (educated guessing)

#### u Market driven based upon the percentage of newly
constructed properties and the percentage of rentals.

**Reconciliation Example**

## u Cost-Depreciation
Value=$120,000

Income Approach Value=$105,000

Sales-Comparison Value=$98,000

## u Straight
Average

($120,000+$105,000+$98,000)/3=$107,667

## u Weighted
Average

20% New, 50% Rentals, 30% Resales

.2*$120,000+.5*$105,000+.3*98,000 = $105,900

**Rounding**

## u Beware of
Significant figures problem

### u $34.35/sq.ft.
* 988,363 sq.ft =$33,950,269.05

### u However,
this must be rounded to $33,950,000 because
the maximum number of significant figures is four.

## u Round to
market expected numbers.

**Range of Value and Probability Distributions**

## u 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.

## u Distribution
is helpful when sufficient data is available.
Especially useful when multi-modal distributions are present.

**Appraisal Reports**

## u Oral

## u Letter

## u Form

## u Narrative

## u Demonstration