RECONCILING THE VALUE ESTIMATES

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# RECONCILING THE VALUE ESTIMATES - PowerPoint PPT Presentation

Chapter 15. RECONCILING THE VALUE ESTIMATES. CHAPTER TERMS AND CONCEPTS. Rounding the answer Significant digits Technical review Value conclusion Value indication. Consistency Evaluate the approaches Evaluate the data Range of values Reconciliation. LEARNING OUTCOMES.

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## RECONCILING THE VALUE ESTIMATES

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Chapter 15

RECONCILING THE VALUE ESTIMATES

CHAPTER TERMS AND CONCEPTS

• Significant digits
• Technical review
• Value conclusion
• Value indication
• Consistency
• Evaluate the approaches
• Evaluate the data
• Range of values
• Reconciliation
LEARNING OUTCOMES

Define the term reconciliation.

Explain why the appraiser must first review each value approach that has been used.

Explain why the appraiser reviews the data used in each approach.

Show how to round the final answer.

GENERAL APPRAISAL REVIEW

1. Review the overall appraisal process.

2. Review for technical accuracy.

Reviewing the Data Collected

The type of property being appraised

The agreed scope of work

The intended user(s) of the appraisal

Reviewing the Appraisal Process

Precisely located and identified the property

Clearly defined the property rights to be appraised

Pinpointed the date when the value estimate applies

Given a formal definition of the type of value stated

Clearly defined the intended use and user of the appraisal and report

Technical Review
• All calculations should be checked for accuracy.
• All data should be checked for completeness and accuracy.
• The appraiser should check for consistency.
• Reconsider any assumptions made during the appraisal.
Technical Review
• All calculations should be checked for accuracy.
• All data should be checked for completeness and accuracy.
• The appraiser should check for consistency.
• Reconsider any assumptions made during the appraisal.
Technical Review
• All calculations should be checked for accuracy.
• All data should be checked for completeness and accuracy.
• The appraiser should check for consistency.
• Reconsider any assumptions made during the appraisal.
Technical Review
• All calculations should be checked for accuracy.
• All data should be checked for completeness and accuracy.
• The appraiser should check for consistency.
• Reconsider any assumptions made during the appraisal.
TECHNICAL REVIEW CHECKLIST
• Correct Calculations?
• Data Complete & Accurate?
• Reasonable Assumptions?
ARRIVING AT A VALUE CONCLUSION

\$775,000

≥ \$750,000

\$765,000

\$725,000

That’s It!

Review of the Appraisal

Reconciling the Value Approaches

RECONCILING THE VALUE APPROACHES
• Test For:
• Applicability
• Data (Quality and Quantity)
• Range of Indicated Value
The Value Range
• After a review of the value indication reached by each of the approaches, you will see an indication of what may be the highest number and the lowest number. This suggests the probable range of minimum-maximum value.
• The reliability of each approach influences the reliability of this range.

The answer to any mathematical step should not be reported with any more significant digits than the smallest number of significant digits occurring in any number used.

SUMMARY

After a value indication has been reached for each of the relevant approaches, the appraiser usually must then reduce these separate value indications to a single estimate. This process is called reconciliation.

At the end of this process, a final value conclusion is normally reached. Arriving at a final conclusion involves many considerations. Once your conclusion has been reached, you will then want to consider rounding your answer.