Before you read
Test yourself first: 5 questions
Question 1 of 5
Three comparable sales adjust to indicated values of $245,000, $250,000, and $252,000. In reconciling these into a single value estimate, the appraiser should:
Answer: C. Reconciliation is a matter of professional judgment, giving the most weight to the most comparable and reliable sales rather than simply averaging.
Question 2 of 5
An appraiser finds the best comparable required net adjustments of 4% while another required net adjustments of 22%. In reconciliation, the appraiser should generally give the most weight to the comparable with the:
Answer: B. The comparable requiring the fewest and smallest adjustments is most similar to the subject and is therefore considered the most reliable indicator of value.
Question 3 of 5
In the appraisal process, the final step in which the appraiser weighs the value indications from the different approaches to arrive at a single value estimate is called:
Answer: B. Reconciliation is the analysis and weighting of the value indications from the approaches used to reach a final opinion of value; it is not a simple averaging.
Question 4 of 5
When reconciling value indications from the cost, sales comparison, and income approaches, the appraiser should:
Answer: B. Reconciliation requires judgment: the appraiser gives more weight to the approach most appropriate and reliable for the property type, rather than mechanically averaging.
Question 5 of 5
An appraiser values a small office building. The income approach indicates $820,000, the sales comparison approach $810,000, and the cost approach $760,000. For an income property, reconciliation would most likely give the greatest weight to:
Answer: B. For an income-producing property, the income approach is usually the most relevant and reliable indicator, so it generally receives the greatest weight in reconciliation.
Keep the streak going with more questions like these, each with a full rationale.
What you need to know
HIGHEST AND BEST USE: the legal, physically possible, financially feasible use producing the greatest value. CONFORMITY: similar properties hold value; PROGRESSION lifts a modest home among mansions, REGRESSION drags a mansion among cottages. CONTRIBUTION: an improvement is worth what it adds to value, not what it cost — the pool problem. ANTICIPATION: value reflects expected future benefits, powering the income approach. Plus SUPPLY & DEMAND and COMPETITION rounding out the classic list.
Principles of Value — The Big Eight: FAQs
Is Principles of Value — The Big Eight on the real estate exam?
Yes. Valuation & Appraisal is a scored domain on the real estate licensing exam, and this topic appears in the national portion.
Is this cheat sheet free?
Yes — every page on Cinna RE's resource library is free to read, print and share. The app adds practice questions, mock exams and a readiness score.
