When the three approches is applied to the same property, they will usually produce three separate indications of value. Reconciliation is the art of analyzing and effectively weighing the findings from the three approaches.

 

Although each approach may serve as independent guide to value, all three approaches should be used as a check on the final estimate of value. The process of reconciliation is more complicated than simply taking the average of the three value estimates. An average implies that the data and logic applied in each of the approaches are equally valid and reliable, and should therefore be given equal weight. In fact, however, certain appproaches are more valid and reliable with some kinds of properties than with others.

 

For example, in appraising a home the income approach is usually given little weight, and the cost approach is of limited value unless the home is relatively new. Therefore, the sales comparison approach is usually given greatest weight in valuing single-family residences. In the appraisal of income or investment property, the income approach would normally be given the greatest weight. In the appraisal of churches, libraries, museums, schools, and other special-use properties where there is no income and few, if any, sales, the cost approach would usually be assigned the greatest weight. From this reconciliation, a single estimate of market value is produced. Reconciliation for a single-family residence must be weighted as follows:

 

	Sales comparison approach	$150,000 x 70%	=	$105,000
	Cost approach	$144,000 x 20%	=	$ 28,000
	Income approach	$140,000 X 10%	=	$ 14,000
	Estimate of total market value		=	$147,800