What is the purpose of reconciliation in the appraisal process?

In the appraisal process, reconciliation serves the critical function of objectively weighting various appraisal factors to arrive at a final value for the property. During an appraisal, multiple approaches to value could be applied, such as the cost approach, sales comparison approach, and income approach. Each of these methods provides differing perspectives on a property's value based on distinct data and premises.

The reconciliation process aggregates these diverse insights and assesses their relative weight and relevance concerning the property being appraised. For instance, in situations where comparable sales data is robust, the sales comparison approach may be weighted more heavily. Conversely, if there are significant improvements to the property that are not well-represented in market sales, the cost approach might be given more emphasis.

Ultimately, the goal of reconciliation is to synthesize this information, ensuring that the final valuation is justified based on all available data and methods whilst reflecting the unique characteristics of the property. This rigorous approach helps in achieving a balanced and fair appraisal, facilitating informed decisions by stakeholders involved in the real estate transaction.