Definition
Reconciliation is where appraisers synthesize three valuation approaches into final value estimate. It requires judgment weighing the reliability and relevance of each approach.
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Reconciliation is the critical analytical process where appraisers synthesize conclusions from multiple valuation approaches into a single final value estimate. The appraiser considers the relevance and reliability of each approach based on available data and property type. For residential properties, the sales comparison approach typically carries the most weight, while the income approach may be weighted more heavily for investment properties. The final reconciled value is the appraiser's professional judgment of market value.
Pro Tip
Review reconciliation section in your appraisal. Understand how the appraiser weighted different approaches.
Example
An appraisal reconciles three approaches: sales comparison approach suggests $432,000, cost approach suggests $435,000, and income approach (for a rental property) suggests $430,000. The appraiser weights the sales comparison approach most heavily and concludes to a final value of $431,500.