Certified Residential Appraiser Practice Exam

The process where comparable sales are reconciled is part of which approach?

1. Ground rent capitalization

2. Sales comparison approach

3. Cost approach

4. Allocation approach

The correct answer is: Sales comparison approach

The process of reconciling comparable sales is a fundamental aspect of the sales comparison approach. This approach is primarily used in residential appraisals, where the appraiser looks at recently sold homes that are similar to the subject property in terms of characteristics such as location, size, condition, and features. In this context, the appraiser collects data on these comparable sales and analyzes them to determine a value for the subject property. The reconciliation process involves evaluating the data collected from various comparable properties and making adjustments based on differences in features or conditions. This may include factors such as age, square footage, and any upgrades or features that may increase or decrease the value. By carefully reconciling information from these sales, the appraiser can arrive at a final opinion of value that accurately reflects the market trends and the property’s true worth. Other approaches, such as the cost approach and the allocation approach, do not focus on the reconciliation of comparable sales and instead rely on different methodologies for valuation. The ground rent capitalization approach is primarily concerned with income generated from a property rather than comparable sales, further differentiating it from the sales comparison approach.