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Define Reconciliation in Real Estate


Reconciliation is the analysis of the combined data collected, appraisal methods performed, and the professional judgment of the appraiser, culminating in a final decision. It involves carefully evaluating all of the information and methods used to determine a property's value, and then using the appraiser's expertise to arrive at the most accurate and reliable final value. This process ensures that the appraiser has considered all relevant factors and helps to create a well-supported appraisal report.


An appraiser is hired to determine the value of a house. They collect data on comparable sales, consider the cost to build a similar house, and analyze the income the property could generate if rented out. Each of these methods gives a different value for the house. The appraiser then weighs the importance of each method and the data collected, using their professional judgment to reconcile the differences and arrive at a final value for the property.

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"A Deep Dive for Real Estate Appraisers"

There are a few additional aspects of reconciliation in real estate appraisal that you should be aware of:

Importance of reconciliation: Reconciliation is a crucial step in the appraisal process because it ensures that the final value provided is reliable, accurate, and supported by relevant data. It helps reduce potential biases and inconsistencies that may arise from using a single method or relying too heavily on one piece of data.

Three main approaches to appraisal: Reconciliation typically involves the comparison and analysis of values obtained from the three main appraisal approaches: the Sales Comparison Approach, the Cost Approach, and the Income Approach. Each method has its own strengths and weaknesses, and it's up to the appraiser to determine which approach (or combination of approaches) is most appropriate for a specific property.

Weighting of approaches: In the reconciliation process, the appraiser may assign different weights to the values obtained from each approach, based on the property type, available data, and market conditions. For example, the Sales Comparison Approach may be given more weight for residential properties, while the Income Approach might be more relevant for income-producing commercial properties.

Subjectivity and judgment: Reconciliation involves a certain degree of subjectivity, as the appraiser must use their professional judgment to determine the appropriate weighting of each approach and the reliability of the data used. This highlights the importance of experience and expertise in the appraisal profession.

Appraisal report: The reconciliation process and the appraiser's rationale for their final value should be documented in the appraisal report. This provides transparency and helps users of the report (such as lenders, buyers, or sellers) understand how the final value was derived.

By understanding these aspects of reconciliation in real estate appraisal, you'll be better prepared for your exam and equipped to analyze the final values provided in appraisal reports.
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"Wit & Whimsy with the Dumb Ox: Unlocking Knowledge with Rhyme:"

In the world of appraisals, where value's the key,
Reconciliation happens, like a puzzle, you see.
The pieces are data, methods, and thought,
Combined and considered, a final value they've brought.

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