Which is a common way appraisers reconcile values from the three approaches?

Appraisers often reconcile values from the three approaches—cost, sales comparison, and income—using a weighted average. This method takes into account the relative importance or reliability of each approach in determining the final value of the property. By using a weighted average, appraisers can assign different weights to each value based on factors such as the data’s accuracy, relevance to the specific property, and the prevailing market conditions.

For instance, if the sales comparison approach is more reliable due to a strong market with ample comparable sales, it may be given a higher weight in the reconciliation process. Conversely, if the cost approach is less applicable in a rapidly changing market, it may receive a lower weight. This allows appraisers to arrive at a final value that reflects a more nuanced understanding of the property rather than merely averaging the results of all three approaches equally, which may not capture the complexities of the market or the property being appraised.

Using a simple average or median value would not account for the varying degrees of reliability among the approaches, while an adjusted total typically refers to specific adjustments made to one approach rather than providing a holistic reconciliation. This makes the weighted average the most effective and widely used method among appraisers.