Key term(s):
Reconciliation — The process by which the appraiser evaluates, chooses, and selects from among alternative conclusions to reach a final value estimate.
During the appraisal process, generally more than one approach is applied, and each approach typically results in a different indication of value. It is the responsibility of the appraiser to reconcile the differences in value to arrive at one indication of value.
In the process of selecting the final (single) estimate of value from among the alternatives, and frequently varying value indications developed in the analysis, the appraiser will go through two distinct, important procedures.
First, there must be a review of all the previous work and analysis; the data, the logic, and techniques must be checked and verified. The data are reviewed to ensure that they are authentic, pertinent, and sufficient. The value definition, the identified property rights, and the qualifying conditions imposed are carefully reconsidered to ascertain whether the procedures used in the analysis specifically address each of these items. Review is not reconciliation.
Second, the appraiser must apply logic and judgment through the reconciliation process to arrive at the final estimate of value.
Traditionally a value estimate is reported as a single dollar amount. This figure is the appraiser's best estimate of the value of the property as of a specified date. Because an appraised value is an estimate, it implies a range in which the property value may fall. That value usually reflects the range of conclusions derived from the different approaches used, but the final value opinion need not fall within this range.
Sometimes an appraiser may deliberately avoid stating a single point estimate and report a range of value. By reporting a range, the appraiser indicates that the value lies somewhere within the range.
Remember an appraisal results in an opinion of value. If it is an opinion of market value, it represents the appraiser's perception of the most likely, most probable price available in an arm's-length transaction for the appraised interest subject to the qualifying conditions imposed.
