California Real Estate Practice Exam

In order to arrive at a final value estimate after applying all three approaches to value, what will an appraiser do?

1. Choose the highest value

2. Average the three values

3. Reconcile the three values

4. Select the lowest value

The correct answer is: Reconcile the three values

When applying all three approaches to value, the appraiser will not simply choose the highest value or the lowest value, as these approaches may yield different estimates based on different factors. Instead, the appraiser will need to reconcile the three values, taking into consideration the strengths and weaknesses of each approach, in order to arrive at a final estimate that best reflects the true value of the property. Averaging the three values may also not accurately represent the value, as each approach may weigh different factors differently. Therefore, the best option and the recommended approach is for the appraiser to reconcile the three values to arrive at a final value estimate.